By: Jeff Dutson, King & Spalding LLP
Georgia Supreme Court rules that a judgment creditor’s lien on real property is created the day the judgment is recorded, not the day the judgment is issued. Synovus Bank v. Kelley, No. 7:18-cv-00202 (Ga. Sup. Ct. Aug. 24, 2020).
On December 7, 2016, Synovus Bank won a judgment against Kenneth and Jan Brownlee as the principals of Banner Grain & Peanut Co. and Banner Hay Co. Inc., and obtained an $11.3 million lien against the Brownlees’ real properties. The lien was subsequently recorded in January 2017 in Tift and Worth Counties, and later in March of the same year, the Brownlees filed for voluntary bankruptcy. A trustee was appointed in March 2018, who then filed an adversary proceeding and successfully persuaded the bankruptcy court that the Synovus lien was a transfer of an interest in the debtors’ properties and should be avoided.
Under federal bankruptcy law, certain transfers of the bankrupt debtor’s property may be avoided if the transfers occurred within 90 days before the filing of the bankruptcy petition. The trustee posited that because the bank’s lien was recorded in January 2017, the lien was dated within 90 days of bankruptcy. Synovus argued, however, that the clock actually began running in December 2016 when the judgment was issued, thus was more than 90 days before the voluntary bankruptcy.
Georgia’s highest court found for the trustee. “The text of [OCGA] §9-12-86 (b) could not be plainer in defining when a judgment lien is created on the title to real property, providing that no judgment of any superior court shall in any way affect or become a lien upon the title to real property until the judgment is recorded in the county in which the real property is located,” the Court ruled. In addition, the Court also found no support in the Georgia statutes or in the case law that “the effective date of creation of [the] lien relate[ed] back to the date of the judgment for purposes of establishing the date a creditor obtained a lien against the judgment debtor’s real property.”
