Real Property

• Publication year: 2015

Real Property

Linda S. Finley

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Real Property

by Linda S. Finley^*

I. Introduction

A review of the survey of real property law for the last several years shows an evolution of topics.¹ One year the creation of the Georgia Fair Lending Act,² and the duties that new legislation placed upon attorneys and lenders was a critical topic; the following year (and the next), the topic of interest was how title to church property is determined when a congregation splits.³ For the last few years, the downturn in the Georgia and national economy, and the protection of consumers under foreclosure laws and from the unauthorized practice of law, have seen both judicial and legislative scrutiny. Couple these sometimes emerging, yet always important, issues with traditional areas of real property law, such as boundary disputes, easements, title to property, zoning and the like, and the conclusion can only be that the modern real estate practitioner must stay current and knowledgeable about a myriad of topics that change from year to year.

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II. Legislation

The time-honored tradition of Sine Die ended Day 40 of the 2015 Georgia legislative session on Thursday, April 2, 2015. Although the most newsworthy legislation was perhaps the legalization of marijuana for medicinal use,⁴ not to be lost are several pieces of legislation important to real estate practice.

The Georgia General Assembly enacted House Bill 322,⁵ which changed the provisions of the Georgia Code relating to the witnessing requisites for deeds, mortgages, and bills of sale and provides for the filing of deeds under power within a certain time after foreclosure sale and assessment of a fine for late filing.⁶ Specifically, sections three through seven of the bill changed the attestation requirements for mortgages and security deeds.⁷ Under the prior statute, a mortgage or security deed had to be signed by two witnesses to the grantor's signature.⁸ Such instruments also had to be witnessed or acknowledged in front of a notary or other authorized officer.⁹ Generally, this requirement meant security deeds would have one official witness (notary) and one unofficial witness. However, in cases where a deed was acknowledged to the notary (that is, situations in which the notary did not actually see the grantor sign the deed, but the notary was told by the grantor that the signature on the deed was his or hers), a deed was to have one official "witness and two unofficial witnesses."¹⁰ This requirement was the subject of much litigation, mostly as the result of a Chapter 7 bankruptcy trustee in the United States Bankruptcy Court for the Northern District of Georgia seeking to avoid security deeds that were not properly witnessed.¹¹

The bill also amended section 44-14-160 of the Official Code of Georgia Annotated (O.C.G.A.)¹² to establish a $500 penalty for the late filing in the real property records of a deed under power or other deed evidencing

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a foreclosure.¹³ The penalty applies if the deed is recorded more than 120 days after the date of the foreclosure sale.¹⁴ The penalty will be collected by the clerk of court at the time the deed is presented for recording.¹⁵ The new statute states the penalty will be paid by the holder of the deed to secure debt or mortgage, so it is unclear who will be required to pay the penalty in cases when a property is sold to a third party at the foreclosure sale and the deed under power is delivered to the third party prior to recording.¹⁶ The previous version of this statute required deeds under power to be recorded within 90 days of a foreclosure sale, but it did not establish a penalty for failure to record a deed within that timeframe.¹⁷ That version of the statute was often cited by borrower's counsel, who argued that the failure to record a deed under power within the statutory timeframe made the deed invalid.¹⁸ While the new statutory language creates a late filing penalty for the first time, it specifically allows the late filing of foreclosure deeds and eliminates the argument that a late filed deed is invalid.¹⁹ The amendments became effective on July 1, 2015.²⁰

Senate Bill 101²¹ was enacted to amend the state law protecting coastal marshlands in relation to control of soil erosion and sedimentation, including prohibiting certain activities that would disturb wetlands.²² The legislation amended O.C.G.A. § 12-7-3²³ to add definitions for "coastal marshlands," making it consistent with other sections of the code and defining "maintenance" as "actions necessary or appropriate for retaining or restoring" the marshlands, including emergency reconstruction of damaged structures.²⁴ Most importantly, the legislation added language to the statute to create a "25 foot buffer" along coastal marshlands and to establish and define what, along the buffer zone, could be maintained, and the amendment specifically identifies such structures as landscaping, hardscaping, "bridges, roads, parking lots, golf courses, golf cart paths, retaining walls, bulkheads,

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and patios; provided, however, that if such maintenance requires any land-disturbing activity, adequate erosion control measures are incorporated into the project plans and specifications and such measures are fully implemented."²⁵ The statute is very detailed about what measures must be taken and what exceptions are allowed, and the statute provides protection to fragile marshlands by including that "[n]o land-disturbing activity shall be conducted within [the twenty-five foot] buffer and a buffer shall remain in its current, undisturbed state of vegetation until all land-disturbing activities on the construction site are completed . . . ."²⁶ The statute provides that once stabilization of the area is completed, the buffer can be trimmed of vegetation, if some protective vegetation remains, to protect the water quality and the aquatic habitat.²⁷

A third piece of important legislation was House Bill 477,²⁸ which amended O.C.G.A. § 32-7-4,²⁹ concerning the procedures for disposing of property formerly acquired for public road purposes and later abandoned.³⁰ The amendment provides that if all or a portion of roadway property, which is subject to disposition, is located in a subdivision that has a property owner's association, the notice of the abandonment of the roadway may be provided to a property owner's association in lieu of notifying the individual owners of the abutting land.³¹ The amendment provides guidance for newly incorporated municipalities and how they "assume ownership and control of county road rights of way located within" the newly incorporated areas.³²

III. Condemnation and Eminent Domain³³

While the Georgia Supreme Court and Georgia Court of Appeals issued many decisions in the area of eminent domain, the decisions largely clarified existing law concerning evidentiary issues, procedural

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issues, and standing. The three cases summarized here concern interesting issues related to inverse condemnation, double recovery, and special master proceedings.

In DeKalb County v. Heath,³⁴ William Heath, Jr. filed an inverse condemnation alleging that DeKalb County (County) maintained a continuing nuisance. Heath claimed the County failed to repair its larger storm water drainage system allowing a retaining wall along a creek bed to fail, causing flooding and erosion of Heath's property. After a bench trial, Heath was awarded $28,830 in damages, the cost to repair the retaining wall. The County appealed two findings.³⁵ First, the County contended the trial court erred when it failed to find Heath's action was barred by res judicata.³⁶ Second, the County contended Heath's award was an impermissible double recovery.³⁷ The Georgia Court of Appeals disagreed on both counts and affirmed the decision.³⁸

The County's appellate arguments were based on a prior lawsuit where Heath and another plaintiff sued the County for inverse condemnation arising from flooding and erosion of their properties (Heath 1). In 2012, a jury awarded the plaintiffs $7000 in damages for claims arising from Heath 1. The subject action was filed in March 2011, while Heath 1 was still pending. In Heath 1, Heath did not make a specific claim for damages related to the allegations that the County's retaining wall was improperly constructed and it suffered continuing deterioration with each rain event.³⁹ To support its argument that the subject action was barred by res judicata, the County argued that Heath could have amended the Heath 1 complaint to include allegations of specific damages related to the retaining wall.⁴⁰

The court of appeals disagreed and noted that res judicata does not necessarily bar a claim for subsequent damage caused by continuing injurious action.⁴¹ The court held the two causes of actions were not identical even though they were based on similar facts.⁴² In Heath 1, the action concerned the diminished value of Heath's property due to flooding and erosion. That diminution in value resulted from the County's failure to maintain its overall storm water and drainage system. The subject suit concerned ongoing damage to a specific

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component of the storm water drainage system; more particularly, it involved a deteriorating retaining wall that had not failed at the time Heath 1 was filed.⁴³

The court of appeals affirmed the trial court's ruling because the subject action only sought damages for the cost to repair the wall and not diminution damages.⁴⁴ Accordingly, the court held that "the two actions [do] not share identical causes of action, and the present action involved a fresh nuisance for which a fresh action would lie . . . ."⁴⁵ To directly address the County's contention that Heath received a double recovery, the court pointed out that the trial court limited its award to the cost of repair of the retaining wall and did not award judgment for the diminution of the value of Heath's property, which Heath had been awarded in Heath l.⁴⁶ The...