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Stearns Bank, N.A. v. Mullins

Court of Appeals of Georgia

June 9, 2015

STEARNS BANK, N.A.
v.
MULLINS

Reconsideration denied July 22, 2015 -- Cert. applied for.

Security deed. Pickens Superior Court. Before Judge Bradley.

Tisinger Vance, Avery S. Jackson; Landrum, Friduss & Ash, Phillip M. Landrum III, Phillip E. Friduss, Ellen L. Ash, for appellant.

John J. Capo; Schreeder Wheeler & Flint, Michael D. Flint, Scott D. McAlpine, for appellee.

ELLINGTON, Presiding Judge. Dillard and McFadden, JJ., concur.

OPINION

Ellington, Presiding Judge.

Frances Louise Hawkins filed an action in the Superior Court of Pickens County

Page 486

against her ex-husband, Boyd Lee Mullins, Jr., seeking to hold him in contempt for failing to convey certain real property to her, as provided by their divorce decree. In addition, Hawkins asked the trial court to compel Jasper Banking Company, the holder of a security deed on the property, to release any liens or encumbrances that prevented Mullins from making the conveyance to her. Mullins filed a motion to set aside the security deed. After a hearing, the trial court determined that a seven-year reversionary period applied to the security deed, which period had elapsed, granted Mullins's request to set aside on the basis that title had reverted to him, and entered a decree cancelling the security deed of record. Stearns Bank, N.A., as Jasper Banking Company's successor-in-interest, then filed an application for interlocutory appeal, and we granted the application.[1] On appeal, the bank contends the trial court erred because, instead of a seven-year period, a twenty-year reversionary period applies, which period has not elapsed, and therefore the bank is still entitled to hold the deed as security for Mullins's outstanding indebtedness. For the reasons explained below, we reverse.

With regard to the reversion of title conveyed under a deed to secure debt, OCGA § 44-14-80, as amended in 1994, provides generally for reversion after seven years.[2] Parties to a particular conveyance can opt in to a twenty-year reversionary period, however, which [333 Ga.App. 370] shall apply " where the parties by affirmative statement contained in the record of conveyance intend to establish a perpetual or indefinite security interest in the real property conveyed to secure a debt or debts[.]" OCGA § 44-14-80 (a) (1), (2).[3] See

Page 487

Gordon, 12 Ga. St. U. L.Rev. 313, 314-317 (1995); Daniel F. Hinkel, Ga. Real Estate Title Examinations and Closings, § 2:34 (updated August 2014).

This case concerns a deed to secure debt that was granted on June 2, 1995, and is therefore subject to a seven-year reversionary period pursuant to OCGA § 44-14-80 (a), unless the parties opted to [333 Ga.App. 371] establish a perpetual or indefinite security interest. The record shows that on that date Mullins established an open-ended line of credit with the bank and executed a " Deed to Secure Debt, with Future Advance Clause," as to a 21.88-acre tract of real property in Pickens County. The security deed defined the " Secured Debt" as the first loan that Mullins took under the line of credit ($140,100 for a one-year term, to mature on June 2, 1996) as well as any " extensions, renewals, modifications or substitutions" of the original evidence of debt and included a so-called " dragnet" or " open-end" clause that included in the secured debt all future obligations of Mullins to the bank under any note or other evidence of debt. In Paragraph 16, entitled " Expenses; Advances on Covenants; Attorneys' Fees; Collection Costs," Mullins agreed to pay the bank's expenses in the event he breached certain covenants or the bank collected the debt through an attorney. That paragraph also provided: " This Security Instrument shall remain in effect until released. [Mullins] agrees to pay for any recordation costs of such release." In Paragraph 26, regarding " Other Terms," the deed provided: " The Secured Debt includes a revolving line of credit provision. Although the Secured Debt may be reduced to a zero balance, this Security Instrument will remain in effect until released." The bank filed the deed to secure debt, and it was recorded on June 13, 1995.

Hawkins and Mullins were divorced on December 13, 1999. The decree incorporated a settlement agreement executed November 1, 1999, which stated that a five-acre tract of real property that included the marital home was titled in Mullins's name. The settlement agreement provided that Mullins would convey the five-acre tract to Hawkins. The five-acre tract ...


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