On April 30, 1998, Old Roswell Investments, LLC executed a promissory note and a security deed encumbering property in Roswell, Georgia in favor of Etowah Bank. On October 29, 1998, Old Roswell signed a promissory note in favor of J. Douglas Howe and executed a security deed naming Howe as grantee on the same property. The maturity date in Howe’s security deed was September 28, 2001. Etowah Bank subsequently merged with Regions Bank, and in June 1999, Old Roswell executed a modification agreement replacing Etowah Bank with Regions Bank as the lender on the April 30, 1998 promissory note and security deed. At this time, Howe signed a subordination agreement providing that his security deed was subject to and inferior to the security deed held by Regions Bank. In December 2006, Old Roswell executed a security deed on the same property in favor of Cherokee Bank, N.A., to secure a note evidencing a new loan, the proceeds of which were used to satisfy the promissory note held by Regions Bank. In early September 2008, Howe began the process to effect a sale under power pursuant to his security deed. On November 24, 2008, Cherokee Bank filed a petition to quiet title on the subject property, claiming that it possessed the first priority secured interest in the property. Cherokee Bank also recorded a notice of lis pendens. Cherokee Bank then filed an action seeking injunctive relief against Howe’s foreclosure proceedings. A hearing was held on November 25, 2008, and a temporary restraining order was consented to by all of the parties to reschedule the foreclosure sale for January 6, 2009 in order to allow the parties time to try to settle the case. A special master was appointed by the trial court on December 30, 2008. On January 6, 2009, Howe foreclosed on his security deed and executed a deed under power to MPP Investments, Inc., the highest bidder for value.
A hearing was held before the special master on July 30, 2009. The primary issue argued at the hearing was whether title under Howe’s security deed had reverted to Old Roswell prior to Howe’s initiation of the sale under power pursuant to OCGA § 44-14-80 a 1, which provides that title under a security deed will automatically revert to the grantor seven years after the maturity date of the underlying secured indebtedness. After the hearing, the special master requested additional briefing on the issue of whether the failure by Howe to provide 60-days notice to Old Roswell to cure default before initiating foreclosure proceedings, as stipulated in Howe’s security deed, voids the foreclosure sale. The notice provision in Howe’s security deed states, in relevant part: In case the debt hereby secured shall not be paid when it becomes due by maturity in due course, or by reason of default as above provided, Howe agrees to a notify Old Roswell in writing of such default, specifying the nature thereof and the actions necessary to cure said default; and b permit Old Roswell to cure such default within sixty 60 days from the date of such notice. . . . If, after receipt of notice and the opportunity to cure specified above, Old Roswell is unable to cure said default, Howe . . . may sell the said property at auction . . . to the highest bidder for cash. . . . On October 8, 2009, the special master filed her report, concluding that Howe failed to follow the proper procedure required by the security deed by not providing 60-days notice to Old Roswell, that the sale under power to MPP Investments was therefore void, that the title of the property reverted to Old Roswell pursuant to OCGA § 44-14-80 a 1, and that Cherokee Bank holds a first priority security deed on the property. The trial court adopted the special master’s report, and Howe and MPP Investments Appellants filed separate notices of appeal. The two cases are hereby consolidated for disposition in this single opinion.
