Georgia Attorneys Title Guaranty Fund

Underwriting Bulletin No. 95

August 25, 2003

SUBJECT: (Un)Timely Recording and Improper Execution of Documents, Bankruptcy Trustee Avoidance
We are continuing to see a large number of claims caused by the untimely recording of closing documents, particularly Security Deeds. Most of these are made worse by the large recording gap we have in the various counties, but some are not.

Trustees in Bankruptcy Court are taking advantage of Section 547 of the Bankruptcy Code by asserting under that section that the security interest of the lender is a voidable preference if the Security Deed is not recorded within twenty (20) days of execution. In that case, the lender becomes an unsecured creditor.

Additionally, under § 544(a), we are seeing Trustees in Bankruptcy avoiding Security Deeds which are not properly executed, i.e., lacking an unofficial or official witness (notary), lack of seal, etc. You must make sure your documents are properly executed prior to sending them to recording.

In light of these issues, coupled with the Courthouse gap problems, it is imperative you record all documents immediately after closing. In Fulton County, particularly, we recommend personal delivery of documents, by courier or otherwise, including a “Rush” recording fee. Otherwise, you place your firm and us at a greater risk for claims and your practice being viewed as not in conformity with acceptable standards in the community.

If you should have any question, please contact the Underwriting Department at 404-250-1604 or 800-328-2642.

Printable version: ub95.pdf*

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