Quick answer
Georgia real estate loans are commonly secured by a deed to secure debt, usually called a security deed. The grantor conveys legal title to the grantee as security while retaining equitable rights and possession. When the secured debt is paid and the deed is properly canceled, title is reconveyed to the grantor. Mortgages exist in Georgia law, but the security deed is the Georgia instrument candidates should expect on the exam.
Decision rule. Separate the promissory note from the collateral instrument. Then identify the parties, whether a trustee exists, who holds legal and equitable title, the default remedy, and what must be recorded at payoff.
If you have been studying from a national question bank, you have probably seen a buyer sign a note and a mortgage while the lender records a lien. Georgia supplement questions usually replace the mortgage with a security deed. They also distinguish a judicial foreclosure from a sale conducted under a contractual and statutory power of sale.
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.
- A standard Georgia security deed does not require a trustee. If an answer choice inserts a trustee between borrower and lender, it is describing a deed-of-trust structure rather than the ordinary Georgia security deed.
| Decision point | Georgia security deed | Mortgage in the common lien-theory exam model | Deed of trust in the common exam model |
|---|---|---|---|
| Main parties | Grantor borrower and grantee lender | Mortgagor borrower and mortgagee lender | Trustor borrower, trustee, and beneficiary lender |
| Title or security effect | Legal title passes to the grantee as security; grantor retains equitable rights and possession | Borrower keeps legal title while lender holds a lien | Trustee holds the title interest or power stated by the instrument for the beneficiary |
| Default path | Power-of-sale foreclosure may be used when the deed and Georgia procedure authorize it | Judicial foreclosure is the usual national contrast, subject to state law | Trustee sale may be available under the instrument and state law |
| Payoff | Debt is paid and the security deed is canceled in the public record | Mortgage is satisfied or released | Trustee reconveys or releases as governing law and documents require |
| Fast exam clue | Georgia, grantor, grantee, legal title as security | Mortgagor, mortgagee, lien | Three parties and a trustee |
Do not turn the table into a universal rule for all states. Mortgage and deed-of-trust effects come from the jurisdiction and instrument. The Georgia column is the state-specific answer this site verifies.
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, canceling 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.
The most tempting wrong answer is deed of trust because it also uses a deed-like name. Reject it when the facts contain only borrower and lender and no trustee. Reject the promissory note when the question asks what secures the debt, because the note is the repayment promise rather than the real-property collateral instrument.
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 may run | Often through the courts | Commonly under a contractual power of sale |
For exam purposes, Georgia belongs in the right-hand column. A nonjudicial sale is not automatic merely because the grantee holds legal title. The security deed must contain a power of sale, and the secured creditor must follow Georgia's notice, advertising, time, place, and manner requirements.
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 typical Georgia residential purchase with financing and asks which instrument secures the debt. The expected answer is a security deed. A mortgage, a deed of trust, and a land contract may appear as distractors.
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 canceled, 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 satisfy the debt before the foreclosure sale. Do not confuse it with a statutory redemption period after a completed nonjudicial sale.
- 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?
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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?
Yes. Georgia statutes and tax rules recognize mortgages, so saying they are legally impossible would be wrong. In ordinary Georgia residential financing and on Georgia exam questions, the deed to secure debt is the instrument you are most likely to see. Treat a mortgage and a security deed as legally distinct instruments.
Is a security deed the same as a deed of trust?
No. A deed of trust is a three-party instrument with a trustee. A standard Georgia security deed is between the grantor and grantee, with the grantor conveying directly to the grantee as security.
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 memorize 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.
Sources
- O.C.G.A. § 44-14-60, deed to secure debt as absolute deed
- O.C.G.A. § 44-14-67, cancellation of deed as reconveyance of title
- PSI Georgia Candidate Information Bulletin, 7/1/2026
Recommended next lesson
Continue with Who closes a Georgia transaction, and what an agent may do to connect the security deed to attorney-controlled closings and licensee practice boundaries.