Printer View

Ruling may change Georgia requirements for obtaining deficiency judgments against guarantors

02-Oct-2013

A July 2013 case decided by the Georgia Court of Appeals may change Georgia requirements for obtaining deficiency judgments against guarantors and the law as it has been understood for years. Prior to this recent decision, confirmation of a foreclosure sale has been widely held to be a prerequisite to obtaining a judgment against a borrower or a guarantor on a secured debt after the collateral property had been foreclosed. The only exception to that was if a judgment against the borrower and/or guarantor had been obtained prior to foreclosure.

Recently, however, in HWA Properties, Inc. v. C&S Bank, 2013 WL 3498088 (Ga. App. July 15, 2013), the Georgia Court of Appeals held that the language of the waivers in the Guaranty at issue in that case were sufficient so as to waive any requirement for confirmation of a foreclosure sale prior to suit against the guarantor.  If the HWA decision stands, it will fundamentally change the law as most have understood it.

The guarantor in HWA has petitioned the Georgia Supreme Court for certiorari seeking a Supreme Court review of the decision, and, from looking at that docket, it appears that a number of debtor attorneys, including bankruptcy attorneys, have filed amicus briefs in support of the need for Supreme Court review. Consequently, we may not know for some time if this decision will stand.

We will follow this important case and report on its progress.


Back to Top