Georgia Personal Property Foreclosure (Replevin)

Any person holding a security interest on personal property based upon a written agreement may commence a personal property foreclosure proceeding. The agreement may take the form of a contract retaining title, commercial contract, vehicle title, security agreement or lease. The agreement should contain provisions relating to default and foreclosure and the governing law, whether it be Title 11 of the Uniform Commercial Code or a state statute such as O.C.G.A. 44-14-230 et seq. It is important to note that Georgia has now enacted laws which enable a lender to convert personal property to real property for purposes of recovering the collateral. Also, if the agreement does not reference specific procedures for default or foreclosure will be governed by federal law which may afford the debtor/person in possession/defendant enhanced protections, such as a right to 30 days notice before any proceeding is commenced.

Obviously, the loan documentation must be reviewed to establish the nature of the lien or security and with respect to the governing law before commencement of a personal property foreclosure action. Also, it should be noted that although you will achieve a return of the property if successful in a personal property foreclosure action, you may not obtain a money judgement against the debtor if a consumer transaction is involved.

The process begins by petitioning for a writ of possession. The petition must be under oath and generally takes the form of an affidavit stating the amount of the indebtedness (including interest), a description of the collateral to be foreclosed and the nature of the default. Prior to 2002, the petition would have to be made before a judge of the Superior Court or a Magistrate. Now, the petition may be made before a notary public. Thereafter, the petition may either be filed in the county where the property is located, or where the debtor/person in possession/defendant resides.

Service of the petition along with a summons may be made by delivery to the defendant personally; delivery to someone who has reached the age of majority residing at the premises (if the defendant is unavailable); or, after reasonable effort, by tacking the summons and petition to the door of the premises and sending a copy by first class mail to the defendants last known address. However, if you file the action in the county where the property is located as opposed to where the debtor/defendant resides, you will have to effect personal service on the debtor/person in possession and you will not be able to avail yourself of “tack and mail” service. The Debtor is required to notify the creditor of any changes of address and there is no defect in service if a letter is returned on “tack and mail” service.

The debtor/person in possession has seven days from the date of service of the summons and petition to file a response to the foreclosure, and another seven days to open up default, effectively making a total of fourteen days to respond. A Writ of Possession cannot issue before the fifteenth day in the event there is no response or a deficient answer is filed.

If the debtor/person in possession files an answer containing a legal or equitable defense, a probable cause hearing will be set and the matter will be tried. The answer must contain defenses and can not merely be a request for a hearing or trial.

The answer can be in writing or it can be an oral answer that is endorsed by the clerk of court. Pending the outcome of the trail, the defendant/person in possession may maintain possession of the property. However, if the trial is not resolved within two (2) weeks the defendant/person in possession may be required to pay the amounts
not in dispute into the registry of the Court. The defendant/person in possession will have the right to appeal an adverse decision and essentially have the matter retried in the appellate court.

If there is no response to the original action upon the conclusion of a successful hearing or trial, the court will grant a Writ of Possession to the party prosecuting the action, empowering the marshal or sheriff to seize the subject property. As part of or in connection with the Writ of Possession, there will also be an order directing the defendant/person in possession to turn over the property. There is no time limit within which the Writ must be exercised. However, the prevailing wisdom is that the Writ should be renewed after 3-4 months of inactivity. Once the property is seized it may be surrendered to the plaintiff or be advertised and sold. Again, it is important to note that no personal money judgment can be entered against a consumer defendant in a personal property foreclosure action in Georgia. A successful proceeding will result in a return of the property. To collect on any past due amounts or for damage to the property a separate civil action will have to be prosecuted. Georgia has procedures for an immediate Writ of Possession to issue which would allow a plaintiff to recover the property prior to the institution of foreclosure proceedings, however, this type of writ is only available in commercial transactions and is not available for consumer transactions.