Pingora Loan Servicing, LLC, et al. v. Cathy L. Scarver, No. 20-13615 (11th Cir. 2022)
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Debtor executed a security deed for a piece of property. She acknowledged the deed to her closing attorney who certified the acknowledgment on the deed’s final page.
Under Georgia law, a deed must be attested by two witnesses, and at least one of them needs to be an official such as a notary or court clerk. Here, the deed was invalid because the attorney was a notary, but he failed to attest to the deed. The error was discovered a few years later when the debtor filed for Chapter 7 bankruptcy. Under federal law, a bankruptcy trustee may void a deed if it is voidable by a bona fide purchaser. The managing trustee noticed the problem and sued the loan companies to keep the property in the bankruptcy estate. The loan companies argue that they have produced what the statute requires to save a problematic deed: an affidavit from a “subscribing witness.” Here, the court reasoned that a person becomes a subscribing witness only when she attests a deed, and the closing attorney did not do so. Therefore, the loan companies’ interest in the real property is voidable.
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