In re Williams — B.R. —-, 2008 WL 4168151 ( Bkrtcy.M.D.Ga., September 04, 2008) (J. Hershner).
In a motion to set aside a foreclosure sale, the Court held that a debtor’s equity of redemption was extinguished when the highest bid was made at a foreclosure sale, even if the deed under power was not recorded until after the debtor’s bankruptcy petition was filed.
“A sale under the powers contained in a deed to secure debt divests the grantor of all title, and right of equity of redemption, to the lands described in the deed.” Cummings v. Johnson, 218 Ga. 559, 129 S.E.2d 762, 763 (1963). “As a sale to the highest bidder constituted a complete sale, the plaintiff [the debtor] had no right to redeem it thereafter by contending it was merely a contingent sale and not a cash sale in which event plaintiff might pay off the indebtedness prior to execution of the deed.” Heard v. Decatur Federal Savings and Loan Assoc., 157 Ga.App. 130, 276 S.E.2d 253, 257 (1980).
“The purchaser at a foreclosure sale under a power of sale in a security deed is the sole owner of the property until and unless the sale is set aside.” … “[The debtor] became a tenant at sufferance of [the purchaser] by the terms of the security deed and operation of law when [the purchaser] bid in the property at the foreclosure sale. [The debtor] became a tenant at sufferance even though there was no [foreclosure] deed conveying the property to [the purchaser] as [the purchaser] had sufficient title by being the grantee in the security deed and the purchaser at the foreclosure sale, which gave [the purchaser] the right to bring dispossessory proceedings under Code Ann. § 61-301 et seq [now § 44-7-50].” McKinney v. South Boston Savings Bank, 156 Ga.App. 114, 274 S.E.2d 34, 35-36 (1980).
“A sale under power in a security deed divests the title of the grantor, and he has no legal right several days thereafter, on tender of the amount of the debt secured by the deed to the grantee; who is the purchaser at the sale, to demand a conveyance of the land or a cancellation of the security deed. Where a sale of land is made under a power contained in a security deed, and by permission of the grantor contained in the deed the grantee purchases the land at such sale, the grantor cannot defeat the purchaser’s right to have the sale fully consummated, by tender of the amount of his indebtedness to the grantee before the actual execution of the deed pursuant to the terms of the sale.” Carrington v. Citizens’ Bank of Waynesboro, 144 Ga. 52, 85 S.E. 1027, 1028 (1915).
The Bankruptcy Courts for the Northern District of Georgia and the Southern District of Georgia have held that a debtor’s equity of redemption terminates upon sale to the highest bidder on the date the foreclosure is held even though the foreclosure deed is not recorded until after the debtor filed for bankruptcy relief. First Nationwide Mortgage Corp. v. Davis (In re Davis), 1998 WL 34066146 (Bankr.S.D.Ga., Jan. 21, 1998) (Dalis, J.); Sanders v. Amsouth Mortgage Co. (In re Sanders), 108 B.R. 847, 849 (Bankr.S.D .Ga., 1989) (Davis, J.); Pearson v. Fleet Finance Center, Inc. (In re Pearson), 75 B.R. 254, 255 (Bankr.N.D.Ga., 1985) (Drake, J.). The Court is persuaded that the bankruptcy courts decisions in Davis, Sanders, and Pearson are correct applications of Georgia foreclosure law. In the Court’s view, the debtor’s equity of redemption is terminated when the high bid is made at a foreclosure sale. The high bid is an appropriate and an objective standard under state law for determining when the foreclosure is final.