Defects in the witnessing and attestation of signatures to recorded instruments continue to cause problems for title insurance underwriters. Last month the Georgia Supreme Court issued its decision in the case of U.S. Bank National Association v. Gordon, interpreting O.C.G.A 44-14-33 as it applies to the effect of a recorded security deed which fails to meet the statutory requirements for recording. In U.S. Bank National Association v. Gordon, the security deed executed by the borrower was recorded without the attestation of either a witness or notary. When the borrower filed a Chapter 7 bankruptcy petition, Neil Gordon, the Chapter 7 Trustee, sought to set aside the security deed, arguing that it was not entitled to constructive notice due to the defective attestation.
U.S. Bank’s argument was that this position was incorrect based on the language of O.C.G.A. 44-14-33: “In the absence of fraud, if a mortgage is duly filed, recorded, and indexed on the appropriate county land records, such recordation shall be deemed constructive notice to subsequent bona fide purchasers.” The Court held that, while the position advocated by U.S. Bank would apply to deeds where the defective attestation was a latent defect, such as the case of an attesting witness who did not actually witness the grantor’s signature, it would not apply to cases where the defective attestation was obvious on the face of the deed. The Court focused on the requirement that the deed be “duly” recorded, concluding that to meet this requirement, a deed on its face would have to meet all statutory recording requirements. The net effect of this case is to render the lender an unsecured creditor in the administration of the bankruptcy estate. By now the title insurance underwriter who insured the security deed has no doubt received the lender’s claim notice.
If you have any questions, or need help with your title insurance needs, please do not hesitate to contact Paxin Closing and Escrow, LLC, at 866-752-4445.
