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Stearns Bank NA v. Mullins

Because the evidence showed that the parties intended to establish a perpetual or indefinite security interest in the real property conveyed to secure debts, the applicable reversion period was 20 years from the date of the conveyance, and the trial court erred in applying a 7-year reversionary period and cancelling the security deed.

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Frances Louise Hawkins filed an action in the Superior Court of Pickens County against her ex-husband, Boyd Lee Mullins, Jr., seeking to hold him in contempt for failing to convey certain real property to her, as provided by their divorce decree. In addition, Hawkins asked the trial court to compel Jasper Banking Company, the holder of a security deed on the property, to release any liens or encumbrances that prevented Mullins from making the conveyance to her. Mullins filed a motion to set aside the security deed. After a hearing, the trial court determined that a seven-year reversionary period applied to the security deed, which period had elapsed, granted Mullins’s request to set aside on the basis that title had reverted to him, and entered a decree cancelling the security deed of record. Stearns Bank, N.A., as Jasper Banking Company’s successor-in-interest, then filed an application for interlocutory appeal, and we granted the application.1 On appeal, the bank contends the trial court erred because, instead of a seven-year period, a twenty-year reversionary period applies, which period has not elapsed, and therefore the bank is still entitled to hold the deed as security for Mullins’s outstanding indebtedness. For the reasons explained below, we reverse.

With regard to the reversion of title conveyed under a deed to secure debt, OCGA § 44-14-80, as amended in 1994, provides generally for reversion after seven years.2 Parties to a particular conveyance can opt in to a twenty-year reversionary period, however, which shall apply “where the parties by affirmative statement contained in the record of conveyance intend to establish a perpetual or indefinite security interest in the real property conveyed to secure a debt or debts.” OCGA § 44-14-80 a 1, 2.3 See Gordon, 12 Ga. St. U. L. Rev. 313, 314-317 1995; Daniel F. Hinkel, Ga. Real Estate Title Examinations And Closings, § 2:34 updated August 2014.

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