16.1 Failure to Release Notice of Lis Pendens
An unreleased notice of the pendency of proceedings does not impair marketability after the noticed proceedings have terminated in the Court where pending. Comment: If the lis pendens is for an action in a Court other than the Superior Court of the County in which the real estate lies, the better practice is to evidence the termination of the proceedings on the record.
16.2 Quitclaim, Limited Warranty, Executor’s and Administrator’s Deeds
The fact that a conveyance necessary to the chain of title, including the conveyance to the proposed grantor, is a quitclaim, limited warranty, executor’s or administrator’s deed does not impair marketability or necessitate full inquiry or corrective action. Comment: “If the grantor has title to or an interest in land, a deed of quitclaim is just as effective to pass that title as a deed with covenants of warranty.” McDonald v. Dabney, 161 Ga. 711, 714, 132 S.E. 547 (1926). It is good practice to include within a quitclaim deed a recital as to the purpose for which the deed is given. Good and marketable title to real estate owned by the decedent may be conveyed by an administrator’s deed. Smith Realty Company v. Hubbard, 124 Ga. App. 265, 183 S.E.2d 506 (1971). “The recital in the personal representative’s deed of compliance with legal provisions shall be prima-facie evidence of the facts recited.” O.C.G.A. Section 53-8-13(e).
16.3 Judgments and Executions
Judgments, decrees, orders and writs of fieri facias issued pursuant to any judgment, decree or order do not become a lien upon the title to real property until said judgment, decree or writ of fieri facias is entered in proper indices in the applicable records in the Office of the clerk of the Superior Court of the county in which the real property is located. However, this section does not apply if the parties have actual notice of the existence of a judgment, decree or order or a fi fa issued on same. Comment: O.C.G.A. Section 9-12-86(b). “The purpose of the statute is to protect third persons acting in good faith and without notice by requiring that any judgment, decree or order must be recorded before it will in any way affect or become a lien on title to real property...The period between the taking of the judgment and its recording is merely a period of dormancy. When the judgment is recorded as provided for in the Code, the dormancy ends and the judgment becomes effective as a lien on real estate. We hold that for priority purposes, the judgment then relates back to the date of its rendition and shall be considered of equal date with other perfected liens arising from judgments on verdicts rendered at the same term of court.” National Bank of Georgia v. Morris-Weathers Co., 248 Ga. 798, 800, 286 S.E.2d 17 (1982).
16.4 Dormancy of Judgments
Judgments (except Federal liens in certain situations) become dormant after seven years from their being indexed in the General Execution Docket. In the absence of an entry upon the judgment showing levy or nulla bona and re-recording of same in the General Execution Docket, the judgment is not effective for an additional seven year period. Thus, judgments which were entered seven years prior to the date of examination and which have not been re-filed and re-indexed in the General Execution Docket do not affect marketability of title (O.C.G.A. Section 9-12-60). The same rule applies for State, County and City tax executions (O.C.G.A. Section 48-3-21).
16.5 Cancellation of General Execution Docket Recordings
General Execution Docket recordings may be satisfied of record as follows:
1. By written order of the Plaintiff in execution or its attorney upon the original instrument directing that the instrument be satisfied and that the Clerk enter it satisfied.
2. By Quitclaim Deed from the Plaintiff to the current holder of record title or the Grantee to whom title is being conveyed. Said Quitclaim Deed should set forth the property described therein from the lien of the specific General Execution Docket recording.
3. In instances where the plaintiff in execution or any person who owns or holds an execution has failed to properly transmit a legally sufficient satisfaction or cancellation to authorize and direct the clerk to cancel the execution of record, the clerk is authorized and directed to cancel the execution of record upon the recording of an affidavit by the attorney for the judgment debtor against whom the execution was issued or any attorney who has caused the indebtedness and other obligations under the execution to be paid in full or any attorney who has actual knowledge the indebtedness has been paid in full. The affidavit shall include a recital of actions taken to comply with O.C.G.A. Section 9-13-80(e). Such affidavit shall also include as attachments the following items:
(1) A written verification which was given at the time of payment by the plaintiff in execution or owner or holder of record of the amount necessary to pay off such obligations; and
(2) Any one of the following:
(A) Copies of the front and back of a canceled check to the plaintiff in execution or owner or holder of record showing payment of such obligations; or
(B) Confirmation of a wire transfer to the owner or holder of record showing payment of such obligations; or
(C) A bank receipt showing payment to the plaintiff in execution or owner or holder of record of such obligations.
Comment: The third method for a cancellation of a General Execution Docket recording is based upon O.C.G.A. Section 9-13-80(e), effective July 1, 2004. This method of cancellation is only effective in the event that a plaintiff in execution or any person that owns or holds an execution has failed to properly transmit a legally sufficient satisfaction or cancellation to the clerk within 60 days after written notice mailed to such plaintiff in execution or owner or holder of record has been sent. The notice mailed to the plaintiff in execution or owner or holder of record shall identify the execution, and shall include a recital or explanation of O.C.G.A. Section 9-13-80(e). (This section was revised effective August 18, 2005 to add Paragraph 3 and related Comment.)
16.6 Liens Arising from the Uniform Commercial Code
Marketability of title is adversely affected by (1) any UCC financing statement filed prior to 1995 which purports to cover fixtures, crops, minerals or any other real estate related collateral, (2) any deed to secure debt or mortgage filed as a fixture filing, and/or (3) any UCC financing statement filed on or after January 1, 1995 if a UCC-2 Real Estate Related Notice Filing (as hereinafter defined) has been filed in the real estate records affecting the subject property. Marketability of title continues to be affected until the statement and any notice filing made in connection therewith have been terminated or cancelled or the subject property has been released from the lien of the statement and any notice filing. In order to discover any UCC financing statements or deeds to secure debt filed as fixture filings which may affect title, the examiner currently must search (i) the indexes in which pre-1995 UCC statements would have been filed, (ii) the new central indexing system (as described below) and (iii) the real estate records. Any UCC statements, deeds to secure debt filed as fixture filings and/or notice filings which purport to affect the real estate must be reported to the client as an exception to title to enable the closing attorney to have both the statement and the notice filing terminated of record. The examiner is not required to examine title to personal property unless specifically directed to do so by the client.
Comment: See generally O.C.G.A. Section 11-9-401 - Section 11-9-409. The new Uniform Commercial Code (“UCC”) Central Indexing and Local Filing System for Georgia, which became effective on January 1, 1995, creates a new “file anywhere” system for UCC financing statements and a new Georgia Superior Court Clerks Cooperative Authority (the “Authority”) to administer and regulate the new system (O.C.G.A. Section 11-9-407). The local indexing system, which was in use in Georgia until the new law became effective on January 1, 1995, will continue for UCC filings filed prior to January 1, 1995. Thus, until all pre-January 1, 1995 financing statements have lapsed or been terminated, examiners will have to search both systems. It is difficult to state at what point the dual indexing system will terminate, since it will exist until all pre-January 1, 1995 real estate deeds to secure debt filed as fixture filings are released or satisfied of record or until their effectiveness otherwise terminates as to the real estate.
In order to preserve this new “file anywhere” system for financing statements, yet still maintain the integrity of the real estate records such that a secured party may obtain priority over conflicting interest of other encumbrances or owners of real estate, a notice filing is required to be made in connection with security interests in related real estate collateral [i.e. fixture filings and financing statements covering crops, minerals or the like, including oil and gas and accounts resulting from the sale of minerals and the like (including oil and gas) at the wellhead or minehead (hereinafter referred to as “UCC Related Real Estate”; said notice filing being herein referred to as either a “UCC-2 Real Estate Related Notice Filing” or a “notice filing”)]. In order for a secured party to have a perfected interest in Real Estate Related Collateral, this UCC-2 Real Estate Related Notice Filing must be made in addition to and not in place of a financing statement otherwise required to be filed. The notice filing must be made notwithstanding the fact that the financing statement covering the collateral was filed in the county in which the real estate is located or elsewhere as permitted under the “file anywhere” rule [O.C.G.A. Section 11-9-402 and Section 11-9-403(7)]. Security deeds filed on or after January 1, 1995 can no longer serve as fixture filings [O.C.G.A. Section 11-9403(6)]. Notice filings must be made in the real estate records in the county or counties where the relevant UCC Related Real estate is located [O.C.G.A.Section 11-9-403(7)]. If the UCC Related Real Estate is located in multiple counties, separate notice filings must be made in each county in which the UCC Related Real Estate is located. A notice filing will be deemed filed upon presentation to the clerk for filing and tender of the filing fee [O.C.G.A Section 119-403(1)]. Notice filings will be indexed in the grantor/grantee index of the real estate records under the name of any owner or lessee of record shown on the notice filing. If no name is shown, the notice filing will be indexed under the name of the debtor as if the debtor were the mortgagor in a mortgage of the real estate described. There will not be a separately maintained local index for notice filings, nor will the Authority maintain a central index for notice filings.
16.7 Methods of Canceling UCC Financing Statements and Notice Filings
1. All UCC-1 financing statements may be terminated or released by filing a UCC-3 statement of termination. This form is prescribed by the Authority. For pre-1995 financing statements, the UCC-3 termination statement must be filed in the county in which the original statement was filed (if the original UCC-1 was filed in multiple counties, the termination need only be filed in one of the original counties). 48
2. Releases and terminations (as well as amendments and assignments) of notice filings may be on forms prescribed by the Authority or may be in the same form as “comparable instruments” used to release or terminate (amend or assign) mortgages in the real estate records.
Comment: See O.C.G.A. Section 11-9-403(7). It appears that a secured party may cancel both its security deed and notice filing in the same document. While the law states the releases or terminations of notice filings need not be attested or acknowledged, it is silent regarding whether the documents nonetheless need to be in recordable form. Until the issue is clarified, prudent practice would dictate having any release documents other than that prescribed by the Authority properly witnessed and notarized. Amendments, releases, assignments and terminations must be filed in the county or counties in which the original notice filing(s) were recorded.