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48 LEGAL INDUSTRY UPDATE STATE FOCUS GEORGIA GEORGIA ADDRESSES STATUTE ON EXECUTION OF DOCUMENTS By Jon F. Young In 2015, the Georgia legislature passed a bill on the witnessing of documents for recording in Georgia. e bill went into effect on July 1, 2015, applying only to documents executed after that date. Despite the passage of time, it is still the case that many documents important to lenders and servicers in Georgia are not being executed in accordance with the new requirements, which leads to delays in collection enforcement actions, including foreclosures. is is especially true for documents executed outside Georgia, which has become increasingly common as lenders and servicers have become more national operations. e Statute e new "bill on the witnessing of documents for recording in Georgia" is actually not one statute but a series of amendments to existing statutes that affect the execution and witnessing of warranty deeds, quitclaim deeds, and, most importantly for lenders and servicers, security deeds (or deeds to secure debt) and assignments. ese documents must now be "signed by the maker, attested by an officer as provided in Code Section 44-2-15 [basically, a notary], and attested by one other witness." In short, documents for recording in Georgia must now be attested by two (2) witnesses, one of whom must be the notary. is is now viewed as the exclusive way that documents must be signed to be admitted for recording in Georgia. What it Means e significant effect of this new language is that it no longer permits documents to be executed with two witnesses, with the notary then using a notary acknowledgment form. For reasons that are open to speculation, this method of witnessing and notary acknowledgment had become more common in Georgia in the last 15 years or so. But use of a notary acknowledgment form indicates that the notary actually did not witness the signing, and so this is now not a good practice, as the stated requirement in the revised statutes is that the execution of the document must be attested (witnessed) by the notary (an officer as provided in Code Section 44-2-15). Regardless, it is still not unusual to see documents executed in Georgia, especially assignments, that do not comply with the requirements, even after more than two years in effect. An equally significant effect of the new language is how it may (or may not) interact with witnessing requirements for documents executed in states other than Georgia that are to be recorded in Georgia. For example, some states have statutorily prescribed notary acknowledgment language that makes it clear that the notary did not actually witness the signing of the document—and the problem is worse in states where there are varying opinions and practices regarding how much the statutorily- prescribed acknowledgment language can be changed. In such states, less is better, so minor additions such as "notary witness" or "in my presence" or "who appeared before me" can do the trick. In other states, no witnesses at all are required by that state's laws, only a notary acknowledgment. In these cases, a witness signature will need to be added, in addition to making modifications to the acknowledgment language to be sure it states that the notary witnessed the signing. ese issues and potential conflicts probably can be worked out satisfactorily, but it does require understanding of the issues and requirements involved. Jon F. Young is an attorney in Weissman's residential foreclosure practice. roughout his career, Young has also advised and represented homebuilders, developers, lenders, and loan servicers on variety of matters. MARYLAND MAJOR IMPACT OF JUDICIAL DECISION PUTS THE BRAKES ON SOME MARYLAND FORECLOSURES By John Ansell On June 6, 2017, the Court of Special Appeals, Maryland's intermediate appellate court, issued an opinion in the combined cases of Blackstone v. Sharma, Sept. 2015 No. 1524, and Shanahan v. Marvastian, Sept. 2015, 1525. is case arose out of challenges filed in two foreclosure cases docketed there and can conservatively be said to have sent shock waves through some servicers and their attorneys in the state. e case has resulted in hundreds, if not thousands of foreclosure cases being placed on hold, with their futures uncertain. Specifically, the Court of Special Appeals upheld the dismissal of two foreclosure actions initiated on behalf of a Delaware Statutory Trust (DST) because the DST was not a licensed collection agency pursuant to the Maryland Collection Agency Licensing Act, Md. Code, Bus. Reg. § 7-101, et seq. ("MCALA"). It also held that any judgment entered as a result of the foreclosure actions would be void. In declaring such matters void, as opposed to merely voidable, the court has cast a cloud on the title of potentially thousands of foreclosures that have been completed since MCALA was enacted in 2007. While MCALA has numerous exceptions (including for licensed banks, credit unions, and mortgage lenders), the licensing requirement applies "whenever the person does business as a collection agency in the State." Md. Code, Bus. Reg. § 7-301(a). Although it also contains an exception for trust companies, the court here explicitly found that the type of trust in question did not meet the criteria of "trust company." Notably, MCALA also does not apply if the debt in question was not in default at the time it was acquired. In the wake of this opinion, numerous foreclosures already in process were put on hold, and many new cases were not filed while servicers and attorneys scrubbed files to ascertain if the licensing requirement was applicable. Further, many sales that had already been ratified but where the trustee's deed had not been recorded were also put on hold, thereby also putting many REO transactions in jeopardy. Many owners of these mortgage loans also have had to set up special entities to transfer loans specifically for the purpose of being able to obtain the license. On November 30, 2017, the Maryland Court of Appeals (Maryland's highest appellate court) heard oral argument on the appeal filed in response to this opinion, as well as two related cases taken directly on appeal from the circuit court as to the applicability of MCALA to foreclosure proceedings. It is unclear when the Court of Appeals will issue its opinion in the matter. In the meantime, files will stay on hold, and unpaid defaulted loans will continue to weigh on servicers' and debt owners' operations. Needless to say, all of the affected parties are anxiously awaiting the outcome of the Court of Appeals ruling. John Ansell is a partner at Rosenberg & Associates, LLC.

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