Real Property

• Publication year: 2022

Real Property

Erica L. Burchell

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Real Property

Erica L. Burchell^*

I. Introduction

This Article surveys developments in Georgia real property law between June 1, 2021 and May 31, 2022.¹ The 2021 Calendar year saw interest rates on a fixed-rate thirty-year mortgage hover at or around roughly 3%—oftentimes actually being below 3%.² Since the beginning of 2022, those rates have continued on a nearly steady climb, with the average rate for a thirty-year fixed-rate mortgage for the week of May 26, 2022, clocking in at over 5%, a staggering difference from the year before.³ Rising interest rates have likely cooled demand for refinances.⁴ Nationally, while 2022 is showing a decline in new purchase mortgage originations,⁵ prices in Georgia still appear to be on the increase.⁶ In fact, the Georgia Association of Realtors' Monthly Housing Indicators show a 22% increase in the median and an increase of the average sales price of

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over 15%.⁷ Moreover, the report indicates that houses in Georgia sat on the market for an average of just twenty-two days in the month of May.⁸ As the year moves into its second half, homebuyers, lenders, bankers, and closing attorneys will just have to watch and see where inflation, interest rates, and the housing market will head.

II. New Legislation: Georgia House Bill 974

Two important changes are coming to real estate records in Georgia thanks to Georgia House Bill 974.⁹ First, all Superior Court Clerk's Offices (Clerk's Offices) in Georgia will be required to offer electronic filing.¹⁰ Second, the bill sets out what information must be included on the first page of deeds to secure debt starting on July 1, 2023.¹¹ Both of these changes could significantly impact attorneys practicing in the realm of real property because the changes are practical—rather than theoretical.

A. E-Recording

While many county Clerk's Offices in Georgia already support the electronic filing of real estate records, presently some Clerk's Offices only support paper filings.¹² By July 1, 2023, however, the option to electronically file deeds, mortgages, plats, and more will be available in all Georgia Clerk's offices.¹³ Moreover, Clerk's offices must have a public computer terminal available that grants filers access to the Georgia Superior Court Clerk's Cooperative Authority's portal for electronic filing.¹⁴

Notably, the bill does not make electronic filing of real estate records mandatory.¹⁵ Instead, the bill mandates that Clerk's Offices provide the option of electronic filing for real estate records.¹⁶ Admittedly, for attorneys, bankers, title examiners, and other people involved in real estate practice primarily in counties that already offer electronic filing, this part of the bill may not appear particularly groundbreaking.

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However, this bill will undoubtedly impact real estate law practices in Georgia counties where Clerk's Offices do not currently offer the option to electronically file real estate records.

B. Changes to the First Page of Deeds to Secure Debt

Lenders and attorneys currently preparing their deeds to secure debt on letter-sized paper may need to consider switching to legal-sized paper, as Georgia House Bill 974 makes one other critical change to the filing of real estate records in Georgia. Beginning July 2023, the first page of all deeds to secure debt must include the document's date, the names of all document signatories, the mailing address of the grantee, the initial maturity date of the debt, the intangible tax amount, and the original loan amount, among other things.¹⁷ In reality, compressing all that information onto the first page of a deed to secure debt may be a tall order. This is especially apparent when factoring in the space required for the Clerk's Office to stamp recording information on the deed to secure debt once filed. Certainly, though, once put into place, this change will mean that the deed to secure debt's most pertinent practical information will be easier to find—for debtors, lenders, court clerks, attorneys, and future title examiners alike.

III. EASEMENTS

Last year's real property survey of the Annual Survey of Georgia Law outlined the case of Doxey v. Crissey¹⁸ and the dispute over a bridle trail easement located within the Oakton Subdivision.¹⁹ Doxey is an interesting case—not only for its unique facts but also because it was heard by the Georgia Court of Appeals on two separate occasions.²⁰ The court of appeals issued its second opinion in the case on June 10, 2021, falling just outside the prior survey period.²¹

When the case was decided for the second time by the trial court, the Cobb County Superior Court again granted a declaratory judgment and injunctive relief to the Oakton subdivision's residents.²² Doxey appealed. In Doxey II,²³ the sequel, homeowner Doxey contended the trial court

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erred again—slipping up this time by failing to hold a hearing or permitting the parties to make additional arguments prior to issuing its decision in the case.²⁴ The court of appeals agreed with Doxey and vacated the trial court's judgment.²⁵

The first time Doxey was decided at the appellate level, the court of appeals vacated the trial court's order and remanded the case "for proceedings consistent with [that] opinion."²⁶ The trial court, however, merely amended its initial order.²⁷ Following the second trial court order, Doxey's new appeal gave the court of appeals an opportunity to set out a rule that had previously only been laid out in dicta.²⁸ The rule emerging from Doxey II is this: when the court of appeals says "for proceedings" or "for further proceedings," it obligates the trial court to hold a hearing or, at a minimum, to allow parties to submit additional briefing addressing the remanded issue.²⁹ The court reasoned that in this instance, Doxey should have been at least granted the opportunity to address, by supplemental brief, the change in the easement's use and the impact the change had on Doxey and her property.³⁰ So again, the court of appeals vacated the trial court's order and remanded the case "for further proceedings."³¹

IV. LANDLORD AND TENANT

In this Survey period, the Georgia Court of Appeals dealt extensively with the relationship between landlords and tenants—further carving out and clarifying where the rights of one begin and the other's end.³²

In Bennett v. McPhatter,³³ the court of appeals examined the concepts of constructive and actual knowledge and actions for defective construction within the framework of landlords and tenants.³⁴ To summarize the facts, Angela McPhatter was injured in March 2014 after falling through a broken board on the back deck of the house Brenda Daughtry was renting from the owner, James A. Bennett. McPhatter was

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a guest of the tenant, Daughtry. Following the injury, McPhatter brought a negligence and premises liability suit against both Daughtry, the tenant, and Bennett, the owner. Bennett filed a motion for summary judgment, which was denied by the Chatham County Superior Court. Bennett filed an interlocutory appeal, arguing that as an out-of-possession landlord, he had no liability to McPhatter for the injuries she sustained. On appeal, Bennett asserted that because he had no knowledge of the deck's alleged defective condition, he had no duty to inspect or repair the deck. Furthermore, Bennett argued that he was not liable for the deck's defective construction. Agreeing with Bennett, the Georgia Court of Appeals reversed the trial court's ruling, holding that summary judgment in favor of the landlord—at least in this instance—was appropriate.³⁵

To triumph on a motion for summary judgment, the moving party must show that no genuine issue of material fact exists, and furthermore that those undisputed facts—when viewed in the light most favorable to the non-moving party—demand justice as a matter of law.³⁶ The court addressed each of Bennett's arguments in turn, focusing first on Bennett's contention that he had no liability because he was unaware of the defect and then turning second to Bennett's liability, or lack thereof, for defective construction.³⁷

The court began by citing the general rules applicable in the case, but tailored them to the parties and facts at issue.³⁸ In this instance, Bennett would be liable to McPhatter in tort for injuries resulting either (1) from Bennett's failure to mend the deck or (2) from the deck's faulty construction.³⁹ To be liable, Bennett must have had knowledge.⁴⁰ The court made clear that Bennett had no absolute duty to inspect the deck before leasing the home, especially when he had no cause to think an inspection was needed.⁴¹ Bennett's testimony revealed (1) that he had not noticed a problem with the deck when he conducted a walk-through with Daughtry before renting the house to her, (2) that he had never had any prior complaints about the deck, and (3) that he was unaware of any defect or problem with the deck. Daughtry, the tenant, admitted that she had not informed Bennett of the board's weakened condition. So, the

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record showed that Bennett had neither actual nor constructive knowledge of the deck's defect. McPhatter did not provide alternative evidence that Bennett knew—or should have known—about the state of the deck.⁴²

Next, the court narrowed its focus to Bennett's potential liability for defective construction.⁴³ The court made clear that an out-of-possession landlord can be held liable only for structural defects discoverable during a prepurchase building inspection.⁴⁴ Put another way, landlords are not liable for a premise's latent defects just because the latent defect exists at the time of the lease.⁴⁵ The undisputed facts make clear that Bennett did not build, or direct someone else to build, the deck.⁴⁶ Accordingly, Bennett could only be held liable if the defect was discovered during an inspection.⁴⁷ McPhatter put forth no evidence to show Bennett knew about the deck's purported defective...