Short answer

A deed under power is the legal document used to transfer ownership of a property after a nonjudicial foreclosure sale in Georgia. Understanding this document is crucial because it marks the official change in ownership and triggers the process for handling any surplus funds from the sale, which may be available to the former owner after all debts and costs are paid.

Why it matters

Losing a home to foreclosure is stressful, but the details of the process can have a real financial impact. In Georgia, foreclosures are typically nonjudicial, meaning the lender does not need a court judgment to sell the property. Instead, the sale is conducted under the power of sale clause in the security deed, and the transfer of ownership is completed through a deed under power.

Here’s why the deed under power is important for surplus claims:

  • Triggers surplus process: Once the deed under power is recorded, the sale is finalized, and any surplus funds (money left after paying off the debt and costs) are handled according to Georgia law.
  • Proof of sale and timing: The deed under power provides the official record of when the property changed hands, which is key for understanding when surplus funds may become available.
  • Distribution order: Surplus funds are distributed in a specific order: first to cover sale costs and attorney’s fees, then to pay off the secured debt, then to junior lienholders by priority, and finally to the former owner if any funds remain.
  • Who holds the surplus: In Georgia, the foreclosing attorney—not the county—holds the surplus funds and often interpleads them into the superior court of the county where the sale occurred if there are competing claims.

Steps

If you are a former owner seeking to understand or claim potential surplus funds after a foreclosure in Georgia, here’s a practical guide:

Confirm the sale and deed under power: Check the county land records to verify that a deed under power has been recorded. This document confirms the property was sold on the first Tuesday of the month at the county courthouse steps, as required by Georgia law.

Identify the foreclosing attorney: The attorney handling the foreclosure is responsible for holding any surplus funds. Their contact information is usually in the foreclosure notice or sale documents.

Request information about surplus funds: Contact the foreclosing attorney to ask if any surplus remains after the sale. Be prepared to provide identification and details about the property.

Understand the distribution order: Know that funds are first used to pay sale costs and attorney’s fees, then the secured debt, then any junior liens, and only then may the former owner be eligible for remaining surplus.

Monitor for court action: If there are disputes or multiple parties claiming the surplus, the attorney may interplead the funds into the superior court. This means the court will decide who gets what.

Act promptly: Surplus funds do not sit indefinitely. Waiting can limit your options or complicate your claim, especially if the funds are paid into court.

Seek legal guidance: Consider consulting a real estate attorney familiar with Georgia nonjudicial foreclosure and surplus claims to help navigate the process and protect your interests.

Example

Hypothetical scenario:

Suppose a homeowner in Georgia falls behind on their mortgage. The lender initiates a nonjudicial foreclosure and schedules the sale for the first Tuesday of the month at the county courthouse steps. The property sells for $250,000. The secured debt is $200,000, and sale costs and attorney’s fees total $10,000. There is a junior lien of $20,000.

  • Sale price: $250,000
  • Costs and attorney’s fees: $10,000
  • Secured debt: $200,000
  • Junior lien: $20,000

This leaves a surplus of $20,000 ($250,000 - $10,000 - $200,000 - $20,000). The foreclosing attorney holds this surplus. If there are no other claims, the former owner may be eligible to claim the remaining funds, but only after all other obligations are satisfied and any court proceedings are resolved.

Need help understanding your surplus rights?

Speak with a real estate attorney experienced in Georgia nonjudicial foreclosure for guidance tailored to your situation.

Common pitfalls

  • Confusing foreclosure surplus with other types of property sales: Georgia’s nonjudicial foreclosure process is distinct, and surplus funds are not handled by the county or tax authorities.
  • Missing the role of the deed under power: Without this document, there is no official record of the sale, which can delay or complicate surplus claims.
  • Not contacting the foreclosing attorney: The surplus is not held by the county; failing to reach out to the right party can result in missed opportunities.
  • Ignoring the distribution order: Junior lienholders may have priority over the former owner. Not understanding this can lead to unrealistic expectations.
  • Waiting too long: Surplus funds do not remain available forever. Delays can reduce your options or require court intervention.
  • Assuming surplus is automatic: The existence of surplus funds depends on the sale price and the debts owed. Not every foreclosure results in a surplus.

Summary

  • Georgia uses a nonjudicial foreclosure process, with sales held on the first Tuesday of the month at the county courthouse steps.
  • The deed under power is the legal document that finalizes the transfer of ownership after foreclosure.
  • Surplus funds from the sale are held by the foreclosing attorney, not the county, and may be paid into the superior court if there are disputes.
  • Distribution of surplus follows a strict order: sale costs and attorney’s fees, secured debt, junior liens, then the former owner.
  • Next steps: Check the county records for the deed under power, contact the foreclosing attorney about any surplus, and consider consulting a qualified real estate attorney to review your options. This page provides general information and does not create an attorney-client relationship.

Important information

Attorney advertising. Responsible attorney: Christian Cruz, Esq., Georgia Bar Number 238836. Office: CRUZ LAW FIRM, 160 W Camino Real, 589, Boca Raton, FL, 33432.

This page is general information about Georgia law, not legal advice. Reading it does not create an attorney-client relationship, and no such relationship is formed until we have a signed written agreement.

Fee arrangements depend on the posture of the matter and are set out in a written agreement before any work begins. We are glad to explain how fees would work in your situation when we speak.

FAQ

What is a deed under power in Georgia foreclosure?

A deed under power is the legal document used to transfer ownership of a property after a nonjudicial foreclosure sale in Georgia. It is executed by the foreclosing party under the authority granted in the security deed.

Who holds the surplus funds after a Georgia foreclosure sale?

The foreclosing attorney holds any surplus funds after a Georgia nonjudicial foreclosure sale, not the county. If there are disputes, the funds are often interplead into the superior court of the county where the sale occurred.

How are surplus funds distributed after a Georgia foreclosure?

Surplus funds are distributed in the following order: sale costs and attorney’s fees, the secured debt, junior lienholders by priority, and finally the former owner if any funds remain.

Is there a deadline to claim surplus funds after foreclosure in Georgia?

Surplus funds do not sit indefinitely, and waiting can limit your options or complicate your claim. There is no fixed statutory period stated here, but prompt action is recommended.