Real Property

• Publication year: 2017

Real Property

Linda S. Finley

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Real Property

by Linda S. Finley^*

I. Introduction

This Article reviews notable real property issues arising from the decisions of the appellate courts of Georgia as well as legislation enacted by the Georgia General Assembly. Real property law is often thought of as stodgy, particularly with the roots of the practice arising from English common law. However, real property law is ever-changing and often touches on a myriad of issues necessitating the need for the topics reviewed in this Article. This Article provides the practitioner, student, or layperson with a guide to those court decisions entered and legislation enacted during the survey period.¹

II. Legislation²

The 2017 regular session of the 153rd Georgia General Assembly convened on January 9, 2017 and adjourned sine die on March 31, 2017. It was a session filled with many bills, however, few passed. There were 2,270 pieces of legislation introduced during the 2017 General Assembly with only a small number passing both chambers.³

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House Bill 337,⁴ the State Tax Execution Modernization Act, established a statewide tax-lien registry for all tax liens and has modernized provisions relating to the transmittal, filing recording, access to, and territorial effect of tax liens issued by the Georgia Department of Revenue.⁵ The Act goes into effect on January 1, 2018. The Act amends Titles 11, 15, 44, and 48 of the Official Code of Georgia Annotated (O.C.G.A.) relating to the Uniform Commercial Code (U.C.C.), superior court clerks, property, and revenue, and taxation.⁶ It provides definitions and technological advances in electronic record keeping relating to the filing and public access to state tax liens.⁷ It also establishes a process for obtaining certificates of clearance of state tax liens, and provides for duties and responsibilities of the Georgia Superior Court Clerks' Cooperative Authority.⁸

House Bill 197⁹ amended O.C.G.A. § 10-1-15,¹⁰ adding additional provisions to the Fair Business Practices Act¹¹ to add definitions and requirements for individuals or companies who solicit services for obtaining real estate instruments.¹² The amendment defines "instrument[s] conveying real estate" as "any documentary material evidencing an interest in real property required under law to be recorded with the superior court in the county in which the land is located, including, but not limited to, a deed to secure debt, a mortgage, a deed under power, and a lien."¹³ Any person who mails a solicitation for services to obtain such instruments must include these specific words within the solicitation: "THIS IS NOT A BILL OR OFFICIAL GOVERNMENT DOCUMENT. THIS IS A SOLICITATION."¹⁴ These words must be in at least sixteen-point Helvetica font at the top of the document, and the heading must be at least two inches apart from any other text on the solicitation.¹⁵ Further, the text of the solicitation itself

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cannot be larger than the required words.¹⁶ "Failure to comply with [these] provisions . . . shall be considered an unfair or deceptive act or practice which is unlawful and which shall be punishable by"¹⁷ those penalties set out in O.C.G.A. § 10-1-390¹⁸ and, more specifically, O.C.G.A. § 10-1-405.¹⁹

House Bill 434²⁰ amended statutes relative to eminent domain to define and address how condemning parties could treat blighted property, and provides an exception to the requirement that parties not convert condemned property to any use other than a public use for twenty years from the initial condemnation.²¹ Most particularly, the amendment creates a new section, O.C.G.A. § 22-1-15,²² that sets out the procedure for condemnation of blighted areas where a public use is not immediately known and "economic development is a secondary or ancillary public benefit of condemnation."²³ The amendment identifies what must be alleged, who should be served with notice of the condemnation, and how those parties should be served with such notice.²⁴ The amendment requires a hearing before a superior court, a judicial determination that all necessary parties received proper service, and that the potentially condemned property is deemed "blighted."²⁵ If the court deems the property as blighted, its order must include, or:

a statement of the then current approved land use of the property, or in the case of vacant property, the last lawful use for which the property was occupied, and such property's future use shall be restricted to the same land use as stated in the order for a period of five years from the date of the order.²⁶

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III. Title to Real Property²⁷

In Tyrones v. Tyrones,²⁸ the Georgia Supreme Court affirmed the trial court's denial of Dennis Tyrones's (Dennis) motion to set aside a partition sale of property he had jointly owned with his deceased brother, whose 50% interest was awarded to his widow (Andrea) and children by the probate court.²⁹ Andrea filed an action to partition the property, and the parties, by consent order, agreed to appraise the property and to sell it at a partition sale if necessary. Following the procedure set forth in the consent order, Andrea obtained an appraisal valuing the property at $175,000 and served the appraisal on Dennis. When Dennis failed to obtain a second appraisal, Andrea's appraisal established the fair market value of the property under the consent order. Subsequently, Andrea filed notice that Dennis had elected not to exercise the option to purchase Andrea's interest and sought to proceed with a public sale of the property. Almost two years later, the trial court entered an order allowing the sale to proceed, and Andrea purchased the property at the sale for $2,000.³⁰

Dennis moved the trial court to set aside the partition sale, claiming neither he nor his counsel received the service copy of the order permitting the sale to proceed, and that he did not receive notice of the sale date until the day before the sale. Dennis also claimed that, upon receiving notice of the sale, he notified two of the appointed commissioners that he would be present and bid at the sale, and further claimed that he arranged to secure sufficient funds. Dennis went to the courthouse for the sale, but left prior to the sale to obtain certified funds. Upon his return, the sale had been completed. The trial court denied Dennis's motion, confirmed the sale, and found that the sale had been properly advertised and conducted: Dennis had nearly two years to exercise his option to avoid the sale but did not; Dennis was aware of the process because it was part of a consent order to which Dennis agreed; Dennis's counsel was aware of the sale since he participated in the selection of the commissioners; and Dennis often ignored communications and deadlines imposed by the trial court during the pendency of the case. Dennis appealed.³¹

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Dennis's primary grounds for appeal were that the sale price of the property was egregiously low, and that the sale process was improper.³² Noting that inadequacy of price is not alone sufficient to set aside a sale, the supreme court held that Dennis's claim turned on "whether the sale . . . was accompanied by some circumstance that might have contributed to the low winning bid;"³³ namely, fraud, mistake, misapprehension, or surprise.³⁴

In review of the claim that neither Dennis nor his attorney were aware of the trial court order setting the partition sale in motion, the supreme court determined that the record was replete with ignored communications from the trial court.³⁵ Of particular importance was the failure to account for either why the order of sale went unnoticed or how Dennis became aware of the sale the day before the sale date.³⁶ In failing to explain the apparent confusion, the supreme court determined there was insufficient evidence to set aside the sale.³⁷

Dennis also asserted he was denied an opportunity to bid at the sale.³⁸ The supreme court determined, however, that there was no evidence to show that Dennis was misled that the sale would be postponed until he returned with certified funds.³⁹ As such, the court held that he was not prevented from bidding but was simply absent from the sale by his own conduct.⁴⁰

Redcedar, LLC v. CML-GA Social Circle, LLC⁴¹ is a consolidated Georgia Court of Appeals opinion of cross-appeals from a trial court order in a complicated timber-cutting dispute.⁴² In Redcedar, a 463.74-acre tract of land in Newton County, Georgia was collateral for three promissory notes for which the borrower was in default. Rather than foreclose, CML-GA Social Circle, LLC (CML-GA), the assignee of the lender, filed suit on the notes and obtained a $9.6 million default judgment against the borrower. After the court entered judgment,

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Redcedar, LLC (Redcedar), a subcontractor, was retained to cut timber from the property and the removed trees were sold to third parties.⁴³

CML-GA discovered the tree removal and filed suit for conversion against Redcedar and others. CML-GA claimed that the timber was cut and removed without CML-GA's written permission, and the defendants were therefore liable under the Georgia Timber Collateral Conversion Statute (GTCCS).⁴⁴ In its complaint, CML-GA sought damages for diminution of value of the property, among other damages. During the pendency of the suit, CML-GA foreclosed on the property and credited $4.4 million toward the borrower's outstanding debt. Thereafter, CML-GA filed a motion for partial summary judgment, claiming that the defendants, including Redcedar, were liable for the remaining deficiency between the amount of borrower's indebtedness and the amount credited from the foreclosure sale of the property.⁴⁵

In response, Redcedar filed its own motion for summary judgment claiming that it was not liable to CML-GA under GTCCS. Redcedar claimed that, although it admittedly cut and removed the trees, Redcedar was acting solely as a contractor, and that foreclosure of the...