Quick answer
Georgia does not use mortgages. A Georgia borrower signs a security deed, which passes legal title to the lender and leaves the borrower with equitable title and the right to possess the property. Title comes back when the debt is paid. That makes Georgia a title theory state.
If you have been studying from a national question bank, you have been taught that a buyer signs a note and a mortgage, the lender records a lien against the property, and foreclosure means going to court. In Georgia, the second and third of those are wrong, and the first one uses the wrong document.
This is not a technicality. It changes who holds title during the loan, what the lender has to do to foreclose, and how long the whole process takes. The state supplement tests it, and it is one of the topics where a candidate who did well on national practice questions can walk in confident and get the Georgia questions wrong.
What a security deed actually does
The instrument is called a deed to secure debt. Most people, including most Georgia agents, call it a security deed. Under O.C.G.A. § 44-14-60, the borrower conveys the property to the lender, and the statute is explicit that the courts treat this as an absolute conveyance rather than a mortgage.
Three parties matter here and the exam names them precisely.
- The grantor is the borrower, the one conveying title.
- The grantee is the lender, the one receiving it.
- There is no trustee. Georgia does not use a deed of trust, so if an answer choice mentions a trustee holding title, it is describing a different state.
The borrower keeps equitable title, which carries the right to occupy the property, to sell it, and to get legal title back on payoff. Under O.C.G.A. § 44-14-67, cancelling the security deed after the debt is paid reconveys title to the grantor. There is no separate satisfaction-of-mortgage document to look for.
Exam trap
A question describing the borrower as holding legal title during the loan is describing a lien theory state. In Georgia the borrower holds equitable title and the lender holds legal title. Reverse those two and the whole answer set flips.
Title theory, lien theory, and why the label matters
The distinction is old and the exam still leans on it.
| Question | Lien theory | Title theory (Georgia) |
|---|---|---|
| Instrument | Mortgage | Security deed |
| Who holds legal title during the loan | Borrower | Lender |
| What the lender holds | A recorded lien | Legal title |
| How foreclosure usually runs | Through the courts | Under a power of sale, out of court |
| Typical timeline | Months, sometimes longer | Weeks |
Georgia sits firmly in the right-hand column. The practical consequence is the one that shows up most often in questions: because the lender already holds title, it does not need a judge's permission to sell. It needs the power of sale that the borrower signed into the security deed, and it needs to follow the advertising and notice rules exactly.
That is covered properly in the Georgia foreclosure walkthrough, because the timing rules are worth their own page.
What the exam does with this
Georgia questions on this topic tend to arrive in one of three shapes.
Naming the document. A scenario describes a residential purchase with financing and asks which instrument secures the debt. The answer is a security deed. A mortgage, a deed of trust, and a land contract will all be sitting there as distractors, and the deed of trust is the one that catches people who studied in a state that uses one.
Locating title. A scenario runs for two sentences about a borrower making payments and then asks who holds legal title. During the loan, the lender does.
Sequencing the payoff. The borrower pays the loan in full. What happens next? The security deed is cancelled, and cancellation reconveys title. Nothing needs to be re-deeded and no new warranty deed is signed.
Worth knowing
Georgia also uses a bond for title in some seller-financed deals, where the seller keeps legal title until the buyer finishes paying. It behaves like a land contract. It is not the same thing as a security deed and § 44-14-60 says a bond for title is not needed when the deed shows on its face that it secures a debt.
The vocabulary that trips people up
A handful of words do a lot of work in these questions.
- Equity of redemption is the borrower's right to pay off and get title back before the foreclosure sale. Georgia has no statutory right of redemption after a non-judicial sale of residential property, so once the sale is properly conducted, that window is closed.
- Power of sale is the clause in the security deed that lets the lender sell without suing. Without it, the lender would have to foreclose judicially.
- Confirmation is the separate court proceeding a lender must go through if it wants a deficiency judgment after the sale.
If you want these alongside the rest of the state vocabulary, the glossary entry for security deed and the title theory entry both carry the trap the exam sets with them.
Check yourself
1. A Peachtree City buyer finances a home purchase. Which instrument does the lender take to secure the debt?
Show the answer
Answer: C. Georgia uses a deed to secure debt, commonly called a security deed. A deed of trust involves a trustee, which Georgia does not use for this purpose, and a mortgage creates a lien rather than passing title.
2. During the term of a Georgia home loan, who holds legal title to the property?
Show the answer
Answer: B. Georgia is a title theory state. Legal title passes to the lender under the security deed and the borrower retains equitable title and possession.
3. A Savannah homeowner makes the final payment on a loan secured by a security deed. What returns legal title to the homeowner?
Show the answer
Answer: B. Cancellation of the security deed operates as a reconveyance of title to the grantor. No new deed is required.
4. Which fact best identifies a state as a title theory state?
Show the answer
Answer: C. Where the lender holds legal title until the debt is satisfied, the state follows title theory. The remaining choices all describe lien theory.
FAQ
Does Georgia ever use a mortgage?
The word gets used loosely in conversation and in advertising, and lenders will talk about your mortgage payment. The recorded instrument in a Georgia residential purchase is a security deed. On the exam, treat mortgage and security deed as different documents.
Is a security deed the same as a deed of trust?
No, and this is the most common wrong answer. A deed of trust is a three-party instrument with a trustee holding title on the lender's behalf. A Georgia security deed is two-party: the borrower conveys directly to the lender.
If the lender holds legal title, can it sell my house while I am paying?
No. The conveyance is security for the debt, not ownership in any practical sense. The lender's title exists to support the power of sale if you default, and the borrower keeps possession, use, and the right to sell subject to paying off the loan.
Do I need to memorise the code sections?
No. Georgia exam questions test the rule, not the citation. The sections are here so you can check the claim yourself, which is a habit worth having when a study guide tells you something surprising.