Georgia Home Law

A new case out of the Georgia Court of Appeals demonstrates just what happens when you get more than you bargained for.  And it's not pretty.

A Georgia couple, Mr. and Mrs. Lampkin, purchased a piece of property in September of 2000 from a man named Walter Walker, Jr.  Mr. Walker conveyed the property to them via a warranty deed.  Contained in that warranty deed was language stating that the deed was subject to another deed - a Deed to Secure Debt that Mr. Walker signed one month prior to the sale.  It is unclear from the case whether the Deed to Secure Debt was attached to the sale papers, or whether the Lampkins read the Deed to Secure Debt.  Was is clear, however, is that that Deed to Secure Debt was a contractual promise from Walker to his bank that covered the property at issue, plus all the future obligations of Walker to the Bank under any promissory note, contract, guaranty, or other evidence of debt existing now or executed after the deed. 

If you've read this blog before, you already know what happens next.  Things went south for  Mr. Walker and by 2007 the Lampkins learned that their property was in foreclosure despite the fact that they made their required monthly payments.  They tried to negotiate for the payoff of the property, the principal amount of which was $12,803.00.  But the bank refused the offer because it turned out that Walker owed the bank more than $198,000.00 on various notes and contracts.  The Lampkins' had no idea about Walker's subsequent loans. 

The house was foreclosed and the bank bought it back for almost $26,000.00.  The Lampkins' filed suit  around this time, alleging fraud and asking the Court to stop the foreclosure.  The Court declined, saying that the deeds were clear: the warranty deed that the Lampkins accepted when they purchased their property stated that the purchase was subject to the Deed to Secure Debt.  And the Deed to Secure Debt clearly covered all subsequent loans Mr. Walker took from the bank.  It made no difference that the Lampkins' had no knowledge of the other debt.  The Lampkins' appealed, but on appeal, the Court upheld the foreclosure.  

This case turned out to be a harsh result for the Lampkins', who presumably lost their investment and their home.  But it is a good lesson for all home buyers out there.  You cannot underestimate the importance of reading your contracts and understanding what they mean.  Because as this case illustrates, you could end up with way more than you thought you'd bargained for.