3.4 Georgia Closing Procedures

Georgia Is an Attorney Closing State

Georgia requires that the closing of a real estate loan be conducted by, or under the supervision of, a licensed Georgia attorney — the practice of examining title and preparing conveyancing documents is the practice of law. Title companies issue insurance and lenders fund, but the closing attorney runs the table.

TRID and the 3-Business-Day Closing Disclosure

Federal TILA-RESPA Integrated Disclosure (TRID) rules govern timing on most residential mortgage loans:

Three changes reset the 3-day clock and require a new disclosure and waiting period: (1) the APR becomes inaccurate beyond tolerance, (2) the loan product changes (e.g., fixed to ARM), or (3) a prepayment penalty is added. Routine fee tweaks do not reset the clock. For TRID, "business days" generally includes Saturdays.

Deeds and Georgia's Title-Theory System

Georgia is a title-theory state and uses a Security Deed (deed to secure debt) rather than a traditional mortgage: the borrower conveys legal title to the lender as security, and title reverts on payoff. Ownership between buyer and seller is conveyed by one of three deeds:

• General Warranty Deed — broadest protection; the grantor warrants title against ALL defects, even from prior owners. Standard in resale homes.
• Limited (Special) Warranty Deed — warrants only against defects arising during the grantor's ownership. Common in REO and foreclosure sales.
• Quitclaim Deed — conveys whatever interest the grantor has, with NO warranties. Used to clear clouds on title or between family members.

Trap: A quitclaim deed is not 'worthless' — it validly transfers whatever interest the grantor holds. It simply makes no promise that the grantor holds any interest at all.

Proration Math: Taxes Paid in Arrears

Georgia property taxes are paid in arrears (billed for the calendar year and typically due in the fall). At closing, the seller owes for the days they owned the property, so the seller credits the buyer for January 1 through the day before closing; the buyer pays the full bill later.

Worked example (365-day method):

• Annual tax bill: $3,650. Daily rate = $3,650 ÷ 365 = $10.00/day.
• Closing date: April 1 (seller owned Jan 1–Mar 31 = 90 days).
• Seller's share = 90 × $10.00 = $900, credited to the buyer at closing.

Exam questions may use a 360-day banker's year (30-day months) — read the stem for which convention to apply.

Recording, Transfer Tax, and Intangible Tax

Deeds are recorded with the Clerk of Superior Court in the county where the land lies, giving constructive notice and establishing lien priority.

Real Estate Transfer Tax

Under O.C.G.A. § 48-6-1, the transfer tax is $1.00 for the first $1,000 of the sale price (or fraction) and $0.10 for each additional $100 (or fraction) — effectively $1.00 per $1,000. It is customarily paid by the seller and computed on price minus any assumed loan.

• Example: A $300,000 sale → $300,000 ÷ 1,000 × $1.00 = $300 transfer tax.

Intangible Recording Tax

The intangible recording tax on the borrower's note is $1.50 for each $500 (or fraction) of the loan amount, capped at $25,000 per note. As of the 2025 HB 586 amendment, the tax applies only to notes with a term of 62 months or longer (long-term notes); short-term notes are exempt.

• Example: A $200,000 30-year note → $200,000 ÷ 500 × $1.50 = $600 intangible tax.

Trap: Do not confuse the two. The transfer tax is on the sale price and the intangible tax is on the loan note; a cash purchase pays transfer tax but no intangible tax.

Title Examination and Curing Defects

Before closing, the attorney runs a title examination of the public records in the Clerk of Superior Court to build the chain of title and surface clouds — unpaid liens, judgments, prior security deeds, easements, and encroachments. Common defects and cures include releasing a prior security deed at payoff, satisfying a mechanic's lien, or obtaining a quitclaim to clear a gap in the chain. The attorney then certifies title and the title insurer issues policies; the lender's policy protects the lender for the loan balance, while the optional owner's policy protects the buyer's equity.

The Closing Table and Recording

Recording is what gives constructive notice to the world and fixes lien priority — generally first to record is first in right. An unrecorded deed is valid between the parties but loses to a later bona fide purchaser who records first, which is why prompt recording is part of the attorney's duty.