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Buyers should be extremely cautious about entering into a contract for deed to purchase a property. There are two main reasons. First, it is possible for the seller to lose control of the property while the buyer is making his payments according to the contract. Second, if a buyer defaults he will likely lose any equity developed in the property.

This first reason may seem counterintuitive. But, sellers are allowed to borrow against the same property they are selling under a contract for deed. In other words, a seller can go to a bank and obtain a mortgage on the exact property they have contracted to sell. They are also allowed to borrow against the property without notifying the contract-for-deed buyer.

The lien that a bank would place on the property would be superior to any rights that a buyer would have under an unfiled contract for deed.[1] Thus, if the seller defaults on his loan to the bank while the buyer is making his payments, then the buyer is in trouble. The bank would foreclose on the property, and the contract-for-deed buyer would lose all rights under the contract for deed, including the right to possess the property. Read More→


There are risks sellers face when using a contract for deed to sell their property. I address two main risks: (1) if a buyer challenges the seller’s eviction attempt, a seller is likely to lose, as many judges are hostile and unfamiliar with contract for deeds, and (2) although contract-for-deed law is historically clear in Georgia, it is archaic and the trend in other states makes it likely that Georgia may eventually find the seller’s eviction remedy unlawful.

Many sellers who use a contract for deed routinely evict their defaulting buyers without incident (see part three for a discussion on remedies). However, when a buyer challenges the eviction, the seller may lose because of the negative judicial perception. 

A few months ago, I was in DeKalb County Magistrate Court attempting to evict a contract-for-deed buyer. Thus, I was assisting my client in using the most popular remedy upon buyer default – eviction. My client’s turn for trial came, and the facts and law were presented to the judge. The judge, who admitted his/her unfamiliarity with the law, nevertheless ruled against my client while vehemently criticizing my client as a shady businessperson. The judge’s scathing remarks came not from the facts of the case, but his/her general view of contracts for deed. In addition, the judge informed my client (and the entire courtroom) that DeKalb County Magistrate judges decided to rule against these “type of contracts.”[1] Although my experience with contract for deeds has fared better in higher-level trial courts (State and Superior Courts), my experience with Magistrate Courts has been concerning. This unfamiliarity and, in some situations, hostility is a good reason for sellers to avoid using a contract for deed.  Read More→


In part two of my article series on the contract for deed, I promised to discuss the most popular remedies a seller can select when a buyer defaults under a contract for deed, including the risk the seller may owe money to the buyer when the buyer defaults.

The most popular options when a buyer defaults under a contract for deed are (1) to rescind the contract and evict the occupying party or (2) to rescind the contract and repossess the property (if it is vacant).  However, when the contract is rescinded, the law requires that the parties be restored to their original status.[1]  In the context of a contract for deed, restoring the parties to their original status means following a restitution formula.  In accordance with the formula, the seller must account to the buyer: (1) all payments made, (2) the value of improvements made, and (3) damages incurred.[2]  Let me give an example:

Suppose Buyer Bob buys a property from Seller Sally using a contract for deed.  The market rent for the property is $500 per month.  Bob and Sally agree that Bob will make a $10,000 down payment and make payments of $1,000 per month for five years.  At the end of the five years Bob will receive the deed, free and clear.  However, two years into the agreement, and after Bob has spent $5,000 renovating the property, he defaults.  In response, Sally decides to rescind the contract and evict him.  Sally is legally entitled to do this, but now the parties need to be restored according to the legal formula – which means she must give an account to Bob. Read More→


In this article, I continue the five-part discussion about contracts for deeds by discussing the four options, or remedies, sellers have when a buyer defaults under a contract for deed. 

When a buyer defaults, subject to the terms of the contract, the seller has four legal remedies.  Two of the four remedies include the same first step – rescinding the contract.  The four possible remedies are: (1) sue on the contract; (2) foreclose; (3) rescind the contract and bring ejectment; (4) rescind the contract, re-enter and re-possess.[1] 

Under the first remedy, the party preserves the contract (as opposed to rescinding it) and sues on it for damages.  This option is similar in time, cost and procedure to other suits on a defaulted loan.  This remedy is generally not the preferred option unless (a) there is substantial equity in the contract versus the value of the property, and (b) the buyer is someone from whom money could be collected after a judgment is rendered. 

The second remedy is foreclosure.[2] In foreclosure, the property is sold at public auction to recover the defaulted amount for the seller.  In order to foreclose without judicial process (the way most foreclosures are performed), the contract for deed must contain or be accompanied by certain language including a power of sale provision.  While foreclosure is a quick and effective remedy, most use a contract for deed for the express purpose of avoiding this remedy.  Read More→


As the title suggests, this is the beginning of a five-part discussion about contract for deeds.  In this series, I will discuss several topics relating to this contract, including the four remedies that a seller has upon borrower default and why most Georgia attorneys do not recommended this type of agreement for either buyers or sellers.  I begin by providing a description of a contract for deed, its background and application.

A contract for deed is an archaic legal contract, which is seeing recent revival.  Originally referred to as a bond for title, a contract for deed can be called several other names including a land contract, agreement for deed or installment sales contract.  Under Georgia law, all these agreements are treated synonymously. 

When a seller of real estate agrees to finance some or all of the purchase price to the buyer, he may use a contract for deed.  While a contract for deed is one way of many to “seller-finance” a transaction, many sellers find it advantageous for the reasons outlined below.  Other ways to seller-finance include a mortgage, security deed or lease-option contract.  Read More→


The more time I spend with real estate investors, the more I appreciate the variety and creativity of their real estate transactions.  However, one thing I hear often concerns me: unlicensed real estate investors “brokering” a transaction for a fee.  In the real estate world, transactions with real estate brokers[1] are far from unusual.  This is only noteworthy with investors because many investors do not hold real estate licenses.  Because the investor is unlicensed, the law will generally void the investor’s ability to get paid a brokering fee – no matter what the contract says. 

Let me give an example.  Suppose Nick (a real estate investor) enters into a transaction whereby he introduces the Seller of an unlisted property to a Buyer.  Nick helps the Buyer and Seller negotiate the price and assists in the execution of the necessary contracts.  Because of his work, the Buyer and Seller agree to pay Nick $10,000 at the closing and put it in writing.  The closing occurs.  However, the Buyer and Seller do not pay Nick.  Frustrated, Nick calls his attorney to see if he can recover the $10,000.  He receives very bad news. Because he is not a licensed real estate broker, the law will not enforce his contract nor allow him to recover for his time. Read More→


This article is the second in a two-part discussion about contractor’s liens, specifically called mechanic’s and materialman’s liens in legal terminology.  In last month’s article, I pledged to discuss two important items in more detail: (1) the requirements when filing a lien and (2) the requirement to file suit to enforce a lien.

First, the law demands several precise requirements in order to find that a contractor’s lien is enforceable.  Because these requirements are technical and many, I have only highlighted some of the requirements below – those which are frequently omitted or incorrectly completed.  Therefore, the contractor’s lien must:

  • Be filed in the office of the clerk of the superior court in the county where the property is located within 90 days after substantial completion of the work or professional services;[1]
  • Include a notice that the owner has the right to contest the lien;
  • Contain an adequate description of the property;
  • State, in at least 12 point bold font, that the lien expires 395 days from the date of filing if no notice of commencement of lien action is filed;[2] and  
  • A copy of the claim of lien must be sent to the owner of the property within two business days.[3]   Read More→

In this article, I begin a two-part discussion about contractor’s liens.  Under Georgia law, these liens are called mechanic’s and materialmen’s liens.  I call them contractor’s liens for simplicity because these liens apply to a broad array of contractors including laborers, professionals and traditional subcontractors. 

Contractor’s liens were first introduced into the United States during the formation of Washington D.C. by Thomas Jefferson to encourage construction of the new capital city.  Thereafter, contractor’s liens were slowly adopted throughout the country to give contractors an additional remedy upon nonpayment.  The policy behind contractor’s liens is simple.  Owners are reluctant to pay for construction work before the work is completed.  That work, once performed, is impractical to repossess.  Therefore, contractor’s liens were created by law to give contractors additional leverage.  Today, contractor’s liens are a powerful tool. 

It is important to distinguish between the right to lien and the right to sue.  Any unpaid contractor (or anyone else) has the right to sue for an amount owed.  However, the law grants contractors an additional right to place a lien on the property in which they have delivered goods, labor or services.  A contractor wants to file a lien when he is unpaid because it gives him an advantage on collection and leverage in negotiation.  After all, an owner cannot generally sell property without satisfying all lien holders.[1] Read More→


I am consistently asked about liens.  Who can file a lien?  How can I file one?  What are my rights?  These are all common questions I hear from real estate brokers, contractors, landlords and others.  For the next few months, I will discuss different industries that have the right to file a lien against real estate.  In all these industries, the right to lien arises when services or goods provided go unpaid.  I will also briefly outline the legal process for perfecting these liens and the necessary next steps.  To begin, I discuss real estate broker’s liens, specifically commercial real estate brokers and the Commercial Real Estate Broker Lien Act.[1]

Licensed commercial real estate brokers have the right to file a lien for services rendered, which are not paid.  There is no lien statute for residential real estate brokers.  Commercial brokers have the right to file a lien for virtually all compensation that has been agreed to.  This includes commissions and compensation for sales, leasing, property management, consulting services and auctions. 

Commercial brokers have the right to file a lien against commercial property only.  Commercial property is defined as all real estate other than: (1) “real estate containing one to four residential units;” (2) vacant land which “is not zoned for nor available for commercial, multifamily, or retail use;” or (3) agricultural land.[2]  Again, there is no right for a real estate broker to file a lien against residential real estate.  Read More→


Many real estate investors dealing with foreclosures, pre-foreclosures or foreclosure workouts are familiar with the case Reese v. Provident Funding Associates.[1]  In Reese, the Court of Appeals of Georgia held that failure to follow a notice requirement identifying the foreclosing lender was fatal to the foreclosure process.  Many real estate law scholars believed this ruling was correct and provided consumer protection.  Additionally, many real estate professionals saw this ruling as an opportunity to level the playing field in foreclosure and pre-foreclosure negotiation.  This ruling, however, is no longer good law.  It has been overturned.

Georgia law requires that a foreclosing lender give notice to a homeowner 30 days before foreclosing.[2]  It also requires that this notice correct identify the “secured creditor.”  In Reese, the Court of Appeals of Georgia interpreted this in a technical fashion.  It found that notice sent by a loan servicer which did not identify the lender was “fatal” to the foreclosure: “While a loan servicer may be permitted to send the notice on behalf of the secured creditor, [the servicer’s] fatal mistake was in sending a notice that failed to properly identify the secured creditor.”[3] Read More→


When a tenant is in default, many landlords face a common question: whether pursuing their tenant for a money judgment is worth the extra time and expense.   All experienced landlords know that they can quickly evict a tenant.  However, the extra effort to obtain a money judgment[1] and even more effort to collect on that judgment may or may not be worth it.  In some situations, a distress warrant may solve this dilemma.   

Many landlords and property managers may have performed dozens of evictions, but may have never heard of a distress warrant.  A distress warrant is an accelerated proceeding by a landlord against a tenant to seize the tenant’s leviable property to satisfy rents owed.  Leviable property includes equipment, furniture, machinery – and as one sheriff once reminded me, cows.  This would not include property subject to the process of garnishment, such as bank accounts or wages.

The legal background of a distress warrant begins with the concept that every landlord has a lien against the leviable property of his tenant.[2]  The way to enforce this lien is through a distress warrant.  The process is not extremely complicated, but is riddled with technical requirements and pitfalls for the inexperienced.  Unlike the eviction process, which many non-attorneys pursue successfully, I do not recommend that a non-attorney attempt a distress warrant proceeding.  Let us now discuss some advantages and disadvantages of a distress warrant.  Read More→


Over the last couple of months, I have described some of the options lenders have when borrowers default on a real estate loan.  In this article, I will discuss borrower’s rights and lender’s obligations when lenders foreclose upon mortgaged real estate. 

If the loan documents are drafted properly, lenders have the right to foreclose without a court order when their borrower defaults on their mortgage.  However, lenders must foreclose legally.  Failure to provide proper notice and follow the legal procedures can lead to an illegal foreclosure.  If a lender breaks the law and forecloses illegally, then borrowers can sue the lender for “wrongful foreclosure.” 

In today’s market, I am often asked about “illegal foreclosures.”   The stories in this area are many and everyone appears to have heard of someone’s aunt or cousin whose mortgage was “forgiven” because of an illegal act by a lender.  The truth is that lenders very rarely make the types of errors that allow for complete forgiveness of the debt.  Most often the errors lenders make are technical and can be remedied.  Sometimes however, lenders do foreclose in an illegal manner and this can lead to liability for wrongful foreclosure.  Let me discuss a few rights of borrowers that are more commonly violated: Read More→