In re Simpson - 544 B.R. 913 (Bankr. N.D. Ga. 2016)

Rule:

A security deed must be attested or acknowledged as provided by law in the manner set forth for mortgages under Georgia law.  In order for a security deed to be duly recorded, it must be attested or acknowledged by an official witness such as a judge of a court of record, a notary public, or a clerk or deputy clerk of a superior court or a city court, and it must also be attested or acknowledged by an additional unofficial witness.

Facts:

Debtor Tammy Patricia Simpson executed a second priority security deed for real property in favor of defendant First Tennessee Bank National Association, successor thru merger with First Horizon Home Loan Corporation securing the repayment of a home equity line of credit. The Signature Page of the Security Deed is the source of the dispute between the parties, as the page consists of two distinct sections. The top half of the page contains a section for the Debtor's signature and the attestation of Debtor's signature by witnesses, and the bottom half of the page is comprised of an acknowledgment clause. The debtor filed her bankruptcy petition under Chapter 7 of the Bankruptcy Code on April 3, 2015, and plaintiff Robert Trauner was appointed the Trustee. Plaintiff trustee filed this adversary proceeding against defendant. In the complaint, plaintiff sought to avoid the security interest held by defendant on debtor's interest in the property under the Security Deed pursuant to 11 U.S.C. § 544 and preserve the Security Deed for the benefit of debtor's bankruptcy estate under 11 U.S.C. §§ 550 and 551. Defendant moved to dismiss the complaint. Plaintiff timely responded and asked that defendant’s motion to dismiss be treated as a motion for summary judgment. Both parties agreed that the sole issue to be determined was the validity of the Security Deed and that their pleadings should be treated as cross-motions for summary judgment.

Issue:

Was the Security Deed valid?

Answer:

Yes. The Court denied defendant’s motion to dismiss, and the judgment granted for the plaintiff.

Conclusion:

The Court held that even if an attesting witness' signature can be located anywhere on the signature page, the Court remains persuaded that the placement of notary officer’s signature within the certificate of acknowledgment carried a greater weight and indicates that the signature is an acknowledgment. However, the Court concluded that the failure of notary officer to insert the date of his notarial act of acknowledgment invalidated the acknowledgment. While this may seem technical, the date of the notarial act was particularly important in the context of the acknowledgment since the acknowledgment need not occur on the same date as the execution of the deed. The Court is persuaded based on the plain language of O.C.G.A. § 45-17-8.1(a) & (b) and case law interpreting the validity of acknowledgments in various contexts that in order to be valid, the notary's acknowledgment must include the date of the notarial act. Lastly, the Court held that  O.C.G.A. § 44-2-18 was inapplicable to this case since there was no subscribing witness affidavit included with the Security Deed. Thus, the Court ruled that in cases where the remedial provision of O.C.G.A. § 44-2-18 does not apply, a waiver such as the one described herein has been found insufficient to indicate that the deed was properly attested.  The attestation of the waiver cannot be substituted for the proper attestation of the security deed.