Eleventh Circuit Voids Deed, Rules Attorney’s Acknowledgment Insufficient – Insolvency/Bankruptcy

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The United States Court of Appeals for the Eleventh Circuit recently overruled a lower court and found that an attorney’s acknowledgment of a deed was not sufficient to remedy the lack of the two certifications required in under Georgian law.
To see Pingora Loan Servicing, LLC v. Scarver (In re Lindstrom), 2022 US app. LEXIS 9423 (11th Cir. April 7, 2022). In this case, the borrower signed a security deed with a lender to secure a loan. His sister attested to the act (that is to sayshe signed a statement that she witnessed the execution) and the closing lawyer/notary acknowledged it (that is to say, he signed a declaration which the borrower acknowledged having signed, but not that he witnessed the signature itself). A few years later, the borrower filed for bankruptcy. The trustee in bankruptcy sued the lender, arguing that the deed was invalid under Georgia law because the law – which was only changed a few weeks before the deed was signed – now required two witnesses to attest the act instead of one. The lender attempted to save the deed under OCGA § 44-2-18, which allows a defective deed to be cured if a “subscriber witness” signs an affidavit that the deed was validly executed and witnessed . The lender argued that the closing attorney was a signing witness and that his acknowledgment was sufficient to register the deed under the law. The district court agreed with the lender and the trustee appealed.

On appeal, the Court reversed. The Court focused on the question of whether someone who signs a

the acknowledgment, as opposed to an attestation, is a “signatory witness” under the law, which had been enacted in 1850. Citing case law and law dictionaries from the 18th and 19th centuries and going forward, the Court concluded that “attestation – signing as a witness to the performance of an act – is the only way for a person to qualify as a ‘subscriber witness’. Therefore, the terms ‘attesting witness’ and ‘subscriber witness’ are synonymous.” As a result, the attorney’s acknowledgment was insufficient under the law. The Court also noted a second problem with the lender’s argument. OCGA § 44-2-18 applies to acts “neither attested nor acknowledged before one of the officers named in Article 44-2-15 of the Code[.]”Because the deed here was acknowledged before an officer, restorative law would not apply: ‘the recognized deed enters limbo – no longer good enough to record, but too good to save.’ The Court noted that this was likely an oversight by the Georgia assembly, and that “it may be” well for the general assembly to consider the wisdom of adopting another “rule of reparation for recognized acts”.

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