Once again, a Bankruptcy case leads to a key opinion in Georgia real estate law and, as often the case, the Chapter 7 Trustee prevails.  In In re Lindstrom, 2022 WL 1041192 (11th Cir. April 7, 2022) (click here for .pdf) the issue was the validity of a security deed, the interpretation of the Georgia “Remedial Statute” and the definition of “subscribing witness.” The basic, undisputed facts are:

When [Debtor] Virginia Lindstrom needed to put up collateral for a $174,500 loan from LoanDepot.com, LLC, she executed a security deed for a piece of property in Lawrenceville, Georgia. As part of that process, her sister attested the deed, signing that she had witnessed its execution. At some point later that same day, Lindstrom also acknowledged the deed to her closing attorney (a public notary), who certified the acknowledgment on the deed’s final page. Although no one recognized it then, the deed was invalid on its face. Under Georgia law, a deed must be attested by two witnesses, and at least one of them needs to be an official such as a notary or court clerk. O.C.G.A. §§ 44-2-15, 44-14-61. The attorney was a notary, but he failed to attest the deed. And his certification of Lindstrom’s acknowledgment was not enough to make the deed valid. There is likely an easy, if unsatisfying, explanation for this oversight: a statutory amendment. Indeed, had the deed been signed only a few weeks earlier, it would have been completely valid. At that time Georgia law permitted deeds to be either attested by or acknowledged before an official. See O.C.G.A. § 44-14-61 (1931) (amended July 1, 2015); O.C.G.A. § 44-14-33 (1995) (amended July 1, 2015). Lindstrom had acknowledged the deed, but the old law no longer governed.

The Debtor filed a Chapter 7 petition in February 2017 and the Chapter 7 Trustee filed an adversary proceeding against LoanDepot and Pingora Loan Servicing (who had taken over the loan) to avoid the security deed.  Scarver v. LoanDepot.com and Pingora Servicing, LLC, Adv. Proc. No. 18-05174 (Bankr. N.D.Ga.) (Sigler, J.).  Bankruptcy Judge Sigler granted the Trustee’s Motion for Summary Judgment (click here for .pdf of summary judgment order).  The lenders appealed and the District Court reversed (click here for District Court opinion).  The Trustee appealed to the 11th Circuit Court of Appeals and the Circuit reversed the District Court.

It was undisputed that the Security Deed was missing the required attestation and, therefore, was avoidable by the Trustee “unless the loan companies find a way to save it.”  The lenders argued that the Security Deed was “saved” by the Georgia Remedial Statute, O.C.G.A. § 44-2-18, which provides:

If a deed is neither attested by nor acknowledged before one of the officers named in Code Section 44-2-15, it may be recorded upon the affidavit of a subscribing witness, which affidavit shall be made before any one of the officers named in Code Section 44-2-15 and shall testify to the execution of the deed and its attestation according to law. A substantial compliance with the requirements of this Code Section shall be held sufficient in the absence of all suspicion of fraud.

The key question was who qualifies as a “subscribing witness” in the Remedial Statute.

The context here reveals that “subscribing witness” is a term of art. For centuries it has carried a particular meaning when used in the context of legal documents like wills, mortgages, and security deeds… And by studying this pedigree we learn that a person who attests a legal document is a subscribing witness… Law dictionaries provide a helpful starting point because “subscribing witness” is a precise and ubiquitous legal
term. Dictionaries from around 1850, when the remedial statute was enacted, provide a consistent definition: for a deed, a “subscribing witness” is a person who attests to its execution by signing his name to that fact… This means that attestation—signing as a witness to a deed’s execution—is the only way a person can qualify as a “subscribing witness.” As a result, the terms “attesting witness” and “subscribing witness” are synonymous…

The broader remedial scheme also confirms that a subscribing witness is a person who attests a deed. The subscribing-witness statute is paired with another remedial statute, which permits any “third person” to remedy a deed —but only when every subscribing witness is unreachable. O.C.G.A. § 44-2-19. And the third person’s affidavit must contain different information than a subscribing witness’s affidavit: the third party must testify “to the genuineness of the handwriting of the subscribing witness,” instead of to the deed’s “attestation according to law.” Compare id. § 44-2-19, with id. § 44-2-18. This variation only makes sense if the subscribing witness’s signature plays the same role as an attestation in proving the validity of the deed— acting as evidence of the deed’s proper execution. Comparing these remedial statutes therefore confirms that a subscribing witness always attests the deed; otherwise her signature would not be written proof that the deed was properly attested.

The Circuit Court Panel rejected the lenders’ argument that certifying a deed’s acknowledgement also transforms a person into a “subscribing witness.”

[A]ttestation and acknowledgment are not equivalent. For one thing, Georgia’s recording statute now rejects acknowledged deeds. And for another, even though a deed and its certification are related, the attestation of one document “cannot be substituted for the proper attestation” of any related or integrated document. See Wells Fargo Bank, N.A. v. Gordon, 292 Ga. 474, 476, 749 S.E.2d 368 (2013)… That is grim news for the loan companies. The closing attorney never attested the deed. He certified that Lindstrom acknowledged the deed, but that is a separate—and now defunct—method of validating a deed. The district court thus erred when it concluded that the attorney’s certification, bolstered by content in his affidavit, qualified him as a subscribing witness. Although subscribing witnesses must also produce a sufficient affidavit to satisfy the remedial statute, the only way to qualify as a subscribing witness is to attest the deed itself. The closing attorney did not. So he is not a subscribing witness, and the loan companies’ attempt to save the deed fails.

A person becomes a subscribing witness only when she attests a deed—when she signs her name as a witness to its execution. See  [White & Co. v. Magarahan, 87 Ga. 217, 219, 13 S.E. 509 (1891), overruled on other grounds by Leeds Bldg. Prods., Inc. v. Sears Mortg. Corp., 267 Ga. 300, 477 S.E.2d 565 (1996)]. Because the closing attorney whose signature Pingora and LoanDepot rely on did not attest the deed, they have not produced an affidavit by a subscribing witness as required by section 44-2-18 of the Georgia Code. As a result, the loan companies’ interest in Lindstrom’s real property is voidable by the trustee because the security deed is defective.


Scott Riddle’s practice focuses on bankruptcy and reorganization. Scott has represented businesses and other parties in Bankruptcy cases for almost 30 years.  You can contact Scott at 404-815-0164 or scott@scottriddlelaw.com.  For more information, click here.