Foreclosure on Real Property
The American legal system allows for two types of real property foreclosures: judicial and non-judicial. The judicial system, as the name suggests, requires a secured party involve a court by filing a lawsuit. The non-judicial system allows secured parties to foreclose without the involvement of a court. The non-judicial system is typically a quicker and cheaper process. While Georgia law provides for both methods of foreclosure, Florida only provides for the judicial method. Below we dig deeper into the salient features and differences between foreclosing on real property in Georgia and Florida.
Although Georgia law allows for judicial foreclosure of real property, the judicial route is rarely used. The preferred method is the non-judicial method due to the fact it is significantly cheaper and quicker.
The non-judicial method of foreclosing in Georgia typically begins with an acceleration or default letter. The letter demands payment of the debt within a pre-determined time frame. Although letters are not a statutory requirement under Georgia’s foreclosure laws, requirements exists in most security deeds and notes drafted in Georgia. After the acceleration or default deadline runs, the secured party must send notice of the initiation of foreclosure proceedings to the debtor to the property address no later than 30 days before the date of the proposed foreclosure. Alternatively, if the debtor provided written notice of a different service address, the secured party must send the notice to the provided address. Furthermore, registered mail, certified mail, or statutory overnight delivery are the proper methods of service. O.C.G.A. § 44-14-162.2 lists other requirements for the notice of foreclosure sale. .
Georgia law requires that the secured party advertise the sale of the property in the legal organ of the county. The advertisement must run for four weeks prior to the foreclosure. See O.C.G.A. § 9-13-140. The actual foreclosure sale is then conducted on the first Tuesday of the month between 10:00 A.M. and 4:00 P.M. If New Year’s Day and/or the 4th of July fall on the first Tuesday of the month, foreclosure day moves to that Wednesday. See O.C.G.A. § 9-13-161. Finally, the execution and recording of a Deed Under Power in the county where the property is located finalizes the foreclosure sale.
For those interested in the unusual methods of foreclosing on real property in Georgia, refer to the following code sections: Foreclosure of a Mortgage at Law (O.C.G.A. §44-14-180 and §44-14-187); Foreclosure of Deed to Secure Debt (O.C.G.A § 44-14-210); and Judicial Foreclosure in Equity (O.C.G.A. §44-14-49).
Florida foreclosures start in the same manner as Georgia foreclosures. First, an acceleration or default letter is sent if required by the underlying loan documents. Once the deadline to pay the debt runs, the secured party will file a lawsuit against the titleholders. It is important to note that Florida law also requires naming additional defendants in the foreclosure action. Examples of potential additional defendants include, but are not limited to, the holders of liens or judgments recorded after the mortgage being foreclosed, condominium/homeowner’s associations, those claiming the property as homestead, etc.
The complaint should include all facts that substantially affect the plaintiff’s right to foreclose. These facts include execution and delivery of the promissory note and mortgage, the present ownership of the note and mortgage, a description of the real property, the names of the present titleholders, defaults on the note and mortgage, and the amount remaining due. See Fla. Civ. Forms. 1.944a-b. Significantly, if the secured party does not possess the original note and allonges, the complaint should have a count stating that the named plaintiff is entitled to enforce the note. The complaint also needs to be verified.
After serving the required defendants with the foreclosure lawsuit, the secured party can then move for final judgment via a motion for default judgment or a motion for final judgment depending on the circumstances. The final judgment will establish a date for the sale of the property. The sale date must be not fewer than 20 days, nor more than 35 days after the final judgment. See F.S. 45.031(1)(a). Florida law requires that the secured party publish the notice of sale once a week for two consecutive weeks in a newspaper of general circulation. See F.S. 45.031(2). Lastly, the foreclosure sale, just like Georgia, is conducted at a public action.
Wherever you are
Foreclosing on real property is a necessary process. Know your state’s laws, review the statutes, and follow appropriate deadlines.
Viraj P. Deshmukh
Admitted in Georgia and Florida
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