Real Property - Linda S. Finley

• Publication year: 2008

Real Propertyby Linda S. Finley^*

I. Introduction

The survey period proved to be an active one for cases and legislation involving real property. Particularly, the Georgia General Assembly, in apparent reaction to the housing and foreclosure crisis faced by the entire country, enacted consumer-friendly changes to the long-standing foreclosure statute.¹ The courts were also active in review of real property issues, and as the number of cases involving real property issues continues to increase, it becomes more difficult to determine which cases should be contained in this Survey. Nevertheless, this Article discusses caselaw and legislative developments in Georgia real property law from June 1, 2007 through May 31, 2008. The cases and legislation discussed in this Article were selected either for their legal significance, to update practicing attorneys, or in some cases to recognize trends. As the reader may see, however, some cases surveyed were selected for their unusual, thought-provoking, and sometimes entertaining facts.

II. Legislation²

The year 2007-2008 has proven to be a volatile period for the economy of the United States and particularly the lending and housing markets. Georgia has suffered its share of pain, and in 2007 it was ranked seventh nationally in the number of foreclosures conducted.³ In an apparent reaction to the crisis, on the last day of the 2008 legislative session, lawmakers passed amendments to the statutes governing the procedure to foreclose real property.⁴ The amendments gave borrowers additional time to react to potential foreclosures by increasing the required number of days between written notice to the borrower and the date of the foreclosure sale from fifteen to thirty days.⁵ The amendments also made consumer-friendly changes to assure that borrowers, whether consumer or commercial, could readily ascertain the identity of the foreclosing party by requiring that the contact information of the individual or entity having the "full authority to negotiate, amend, and modify all terms of the mortgage,"⁶ be provided and that instruments vesting title into the foreclosing party "be filed prior to the time of sale in the office of the clerk of the superior court of the county in which the real property is located."⁷ The amendments allowed some protection to lenders by assuring that the secured creditor would not be required to "negotiate, amend, and modify all terms of the mortgage"⁸ instrument on account of the amendments found at Official Code of Georgia Annotated (O.C.G.A.) Sec. 44-14-162 to -162.4.⁹

In reaction to the bankruptcy of a major Georgia lender in which closing attorneys were caught between covering the lender's bounced checks or risking bar violations,¹⁰ the Georgia General Assembly amended O.C.G.A. Sec. 44-14-13(c) and (d),¹¹ relating to disbursement of closing proceeds.¹² The amendment affects all loans and closings conducted after July 1, 2008 and provides that settlement agents may disburse settlement proceeds from an escrow account only after receipt of one of the following specified negotiable instruments, even if they are not "Collected funds"¹³ (literally meaning cash in hand): (1) A cashier's check issued by a lender specifically for the loan closing and then only if the funds are immediately available and in a form in which the funds could not be dishonored or refused when presented for payment;¹⁴ (2) A check drawn on a Georgia attorney or real estate broker's escrow account if the closing attorney reasonably believes the funds can be collected within a reasonable period;¹⁵ (3) A check issued by the federal government or the State of Georgia;¹⁶ (4) Personal check(s) not exceeding $5000 per loan closing.¹⁷

The 2008 General Assembly also amended the statutory provisions governing materialmen's and mechanic's liens.¹⁸ The amendment provides that a party, mechanic, or materialman of any sort must claim a lien within ninety days after the completion of service and file it in the clerk's office of the superior court.¹⁹ A lawsuit seeking recovery of the claim must be filed within 365 days from the date of filing the initial claim of lien.²⁰ In addition, within thirty days after commencing the suit, "the party claiming the lien shall file a notice with the clerk of the superior court of the county wherein the subject lien was filed."²¹

III. Title to Real Property

In Harbuck v. Houston County,²² Harbuck owned property where an unpaved road ran alongside the frontage. When the developer of a subdivision on the adjacent property sought to complete the unpaved portion of the road to provide access to the development, Harbuck brought suit. A Special Master, in accordance with his duties, deter- mined that Houston County and the developer were entitled to notice of the quiet title action. Following a hearing, the Special Master found that Harbuck did not have color of title to the unpaved road and that she could not bring suit against a subdivision for adverse possession of the road. The Special Master further found that Harbuck was required to show that the road had never been dedicated, the county failed to accept dedication, or the county had abandoned the right of way. The Special Master did not issue any findings for these latter issues but left them to the trial court for disposition. After the Special Master's report was adopted by the trial court, the county and developer were granted summary judgment.²³

On appeal, Harbuck argued that it was error for the trial court rather than the Special Master to rule on the summary judgment motion.²⁴ The Georgia Supreme Court found no merit in the argument.²⁵ Although a special master has jurisdiction to "'ascertain the validity of petitioner's title' . . . there is no authority divesting the trial court's overall jurisdiction of the case."²⁶

Harbuck also argued that the Special Master's determination that the county and the subdivision were entitled to notice of the quiet title action was wrong.²⁷ The court held, however, that the county was entitled to notice because of the county's interest in dedication of the streets delineated in the recorded plat of the subdivision to public use.²⁸ Likewise, the developer of the subdivision was entitled to notice because of its interest in paving the street in question to gain access to the new subdivision.²⁹

On the issues left by the Special Master to the trial court, Harbuck argued that the right of way had not been dedicated by the county because it remained unpaved.³⁰ She relied upon an unrecorded plat she received at the time of the purchase of her own property, which stated, "where dead ends occur during development temporary turn-arounds to be installed, if no future development within 14 months turn-arounds to be paved at the Developer's expense with all necessary utilities and easements to be dedicated to Houston County."³¹ The court, however, held that the language Harbuck relied upon did not clearly retract the presumption of express dedication created by the recorded subdivision plat survey.³² The court noted that it was not necessary that all portions of a street be paved to show dedication of the entire street, including the unpaved portions.³³ The unpaved portion of the street claimed by Harbuck was simply a continuation of a street that had been expressly dedicated by the county, and the fact that the continuation of that street was unpaved was irrelevant.³⁴ Finally, the court determined that the Special Master did not have to recuse himself even though he had deeded unrelated land to the developer in another matter.³⁵

In Murray v. Stone,³⁶ the supreme court reviewed the now-repealed Dead Man's Statute.³⁷ Stone and Murray were adjacent landowners. Stone claimed that she purchased two tracts of land in the 1960s from her sister-in-law (Murray's mother), but she was never given a deed. Stone introduced evidence that she had exclusively occupied and maintained both tracts for more than twenty years. She also testified to a natural boundary line, which Murray never crossed. A jury found in favor of Stone on her claim for adverse possession and prescription, and Murray appealed.³⁸

At trial, the court applied the law regarding conversations with persons now deceased as was in effect during the times of the various conversations between Stone and the seller of the property. Stone was not allowed to testify about her conversations with the deceased seller prior to 1979.³⁹ However, the court allowed her to testify about a 1986 conversation that she had with the seller and Murray. Stone testified that at that time, Murray told her that $240 remained due for the purchase of the tracts.⁴⁰ The conversation gave rise to Stone making payment for that sum, including presentation of a check with the notation "'paid in full land-210 ft. by 80 ft. of land.'"⁴¹ Murray asserted that testimony about the 1986 conversation violated the Dead Man's Statute because the 1986 conversation with the deceased seller and Murray was nothing more than a continuation ofthe 1960s transaction with the now deceased seller.⁴² The Georgia Supreme Court did not find merit in the argument and affirmed the trial court on all grounds.⁴³

In Biggers v. Crook,⁴⁴ which involved a matter of first impression, the supreme court considered whether a deed to secure debt to real property executed by only one joint tenant is extinguished upon the death of the grantor.⁴⁵ Linda Crook and her brother William Biggers were the sole heirs of their mother's estate and took title to her home as joint tenants with the right of survivorship. William Biggers took possession of the property and used it as his residence until the time of his death in 2002. In 1996 William Biggers married Dianne Biggers. Prior to the marriage, they entered into a prenuptial agreement which specified that the property remained the sole and separate property of William Biggers.⁴⁶

In 2002 prior to his death, Rita Craig, Dianne Biggers's sister...