STEARNS BANK, N. A. v. MULLINS.
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).
This case concerns a deed to secure debt that was granted on June 2, 1995, and is therefore subject to a seven-year reversionary period pursuant to OCGA § 44–14–80(a), unless the parties opted to establish a perpetual or indefinite security interest. The record shows that on that date Mullins established an open-ended line of credit with the bank and executed a “Deed to Secure Debt, with Future Advance Clause,” as to a 21.88 acre tract of real property in Pickens County. The security deed defined the “Secured Debt” as the first loan that Mullins took under the line of credit ($140,100 for a one-year term, to mature on June 2, 1996) as well as any “extensions, renewals, modifications or substitutions” of the original evidence of debt and included a so-called “dragnet” or “open-end” clause that included in the secured debt all future obligations of Mullins to the bank under any note or other evidence of debt. In Paragraph 16, entitled “Expenses; Advances on Covenants; Attorneys' Fees; Collection Costs,” Mullins agreed to pay the bank's expenses in the event he breached certain covenants or the bank collected the debt through an attorney. That paragraph also provided: “This Security Instrument shall remain in effect until released. [Mullins] agrees to pay for any recordation costs of such release.” In Paragraph 26, regarding “Other Terms,” the deed provided: “The Secured Debt includes a revolving line of credit provision. Although the Secured Debt may be reduced to a zero balance, this Security Instrument will remain in effect until released.” The bank filed the deed to secure debt, and it was recorded on June 13, 1995.
Hawkins and Mullins were divorced on December 13, 1999. The decree incorporated a settlement agreement executed November 1, 1999, which stated that a 5–acre tract of real property that included the marital home was titled in Mullins's name. The settlement agreement provided that Mullins would convey the 5–acre tract to Hawkins. The 5–acre tract was a portion included within the 21.88–acre tract encumbered by the 1995 deed to secure debt.
In moving to set aside the 1995 deed to secure debt, Mullins argued, inter alia, that pursuant to OCGA § 44–14–80 title to the secured property reverted back to him no later than June 2, 2003, seven years from the date of maturity of the original evidence of debt. The trial court acknowledged that an open-end clause or dragnet clause could create a perpetual or indefinite security interest subject to a twenty-year reversion period under OCGA § 44–14–80. The trial court rejected the bank's argument that its deed to secure debt created such a perpetual or indefinite security interest based only on its finding that the bank “never recorded the deed to secure debt until after the seven year reversion to [Mullins] lapsed on or around June 2003.”
1. The bank contends that the June 2, 1995 security deed contained affirmative statements that the parties intended to establish a perpetual or indefinite security interest in the real property conveyed to secure debts. The bank argues that pursuant to OCGA § 44–14–80(a)(1) the applicable reversion period is twenty years from the date of the conveyance. The bank contends that the trial court therefore erred in ruling that title reverted to Mullins seven years after the original maturity date of the debt. “The construction of a deed presents a question of law which the appellate court reviews de novo. In construing a deed, the court's overriding goal is to ascertain and give effect to the intent of the parties.” (Citations, punctuation, and footnote omitted.) Wilkes v. Fraser, 324 Ga.App. 642, 643, 751 S.E.2d 455 (2013).
The June 2, 1995 security deed on its face shows that the parties intended to create a revolving line of credit. By definition, a revolving line of credit is an indefinite arrangement.4 Under a revolving credit arrangement, the debtor must do more than simply pay the amount due in order to be entitled to have an associated security instrument canceled of record.5 Rather, “[i]n the case of a revolving loan account, the debt shall be considered to be ‘paid in full’ only when the entire indebtedness including accrued finance charges has been paid and the lender or debtor has notified the other party to the agreement in writing that he or she wishes to terminate the agreement pursuant to its terms.” (Emphasis added.) OCGA § 44–14–3(b)(2). This character of revolving debt is reflected in the express provision in the security deed at issue in this case that, even if Mullins reduced the debt “to a zero balance,” the security deed would remain in effect “until released.” See Dixon v. Cook Banking Co., 191 Ga.App. 861, 862–863(2), 383 S.E.2d 337 (1989) (Where a security deed contained a provision that the associated promissory note was “a master note and balances outstanding will depend on draws made and payments applied” and a “future advances” clause, the debt was a revolving loan account as defined in OCGA § 44–14–3(a)(6) and the grantors would be entitled to cancellation of the security instrument only if they notified the grantee in writing that they wished to terminate their line of credit.).6 Certainly, it is preferable for the language used in a deed to secure debt to frame the statement of intent more clearly.7 Still, we conclude that the security deed in this case contained a sufficient statement that the parties intended to establish a perpetual or indefinite security interest in the real property such that the applicable reversion period is twenty years from the date of the conveyance. OCGA § 44–14–80(a)(1).8
Moreover, the record shows that Mullins obtained many additional advances from the bank—as recently as 2010—and executed promissory notes and other documents stating that debts were secured by the June 2, 1995 security deed. He also executed two modifications of the security deed to reference additional debts, one on May 15, 2007 (recorded on May 29, 2007), and another on July 30, 2007 (recorded on August 9, 2007). Both modifications stated that, except as specifically amended, “all terms of the [June 2, 1995] Security Instrument remain in effect.” Having receiving the benefit of the continuing effectiveness of the security deed, Mullins will not now be heard to argue that its effectiveness ended, and title in fee simple reverted to him, in 2003. See Tedesco v. CDC Fed. Credit Union, 167 Ga.App. 337, 339–340(2), 306 S.E.2d 397 (1983) (physical precedent only).
Based on the foregoing, we conclude that the trial court erred in finding that title to the real property reverted to Mullins in 2003 and in granting his motion to set aside the June 2, 1995 security deed on that basis. The order is reversed, and the decree cancelling the security deed of record is vacated.
2. In light of our holding in Division 1, supra, the bank's remaining arguments are moot.
ELLINGTON, Presiding Judge.
DILLARD and McFADDEN, JJ., concur.