Current Issues

As a courtesy to our current and prospective clients, we periodically provide information about legal issues which may be of concern to the community which we serve:

Legislative Update

As you may know, the Georgia General Assembly meets for an intensive 40-day legislative session every year.  The new 151st  Georgia "General Assembly," and the first "session" of that General Assembly, began in 2011. A special session was held in August 2011, principal over redistricting issues.  Here are some links that summarize what happened this year.

     Georgia General Assembly General Statutes (includes coverage of legislation passed in 2011)

    Statutes Signed by Govenor Deal (includes coverage of bills approved and signed by Governor Deal)

Other recent developments

Condominiums:  For years, we have done condominium work, both on behalf of homeowners associations and on behalf of unit owners. There were at least a couple of recent developments in this area of the law about which any Association or unit owner should be informed.

  Hypothetical #1:  You are the owner of a condominium unit.  You owe more on your condo than it is worth. You finally realize that you are throwing good money after bad. So, you move out, stop paying your mortgage, and stop paying your Association fees. You even file bankruptcy to discharge all of your debts.  A couple of years later, the Association contacts you and demands payment of the two years of Association fees that you have not paid since your bankruptcy case ended.

  Historically, if you don't pay your mortgage, normally your lender forecloses upon you. When the bank forecloses, especially if you no longer reside on the property, your liability for association fees ends at the time of the foreclosure (or at the time the foreclosure deed is recorded... this being a "gray" area under the law).  But, banks have started to realize there is little to be gained by foreclosing.  Once they foreclose, the bank becomes liable for Association fees. So, it is becoming more common for banks to not foreclose. This is especially true in States like Florida, where the foreclosure procedures are more cumbersome, but it is becoming more common in Georgia too. Sometimes the bank chooses to sue the borrower instead of foreclosing against him or her. Meanwhile, the borrower continues to be responsible for Association fees.

  Bankrutpcy won't necessarily help you.  In all cases, there is little the Association can do to collect Association fees from you while the bankruptcy is pending. And, once your debts are discharged in bankruptcy, all of your pre-petition debts are discharged. But, at least in this State, you continue to be responsible for all post-petition Association fees (those accruing after the bankruptcy case is filed) so long as you continue to own title to the condominium property. And, there is little you can do to force your bank to foreclose against you.

  This is something you need to think about serious before you decide to "walk away" from your condominium.  You don't necessarily walk away from what you owe the Association.

  Hypothetical #2:  Your Uncle Bob dies.  Uncle Bob owned a condominium.  You discover that, under Georgia law, you are Uncle Bob's closest living relative.  He died without a Will. You and your cousins would ordinarily be entitled to Uncle Bob's assets. But, his debts exceed the value of his assets. Nobody in the family wants to take the time to start a formal probate or adminstration proceeding to settle Uncle Bob's estate. There is more debt on the condo than it is worth. And, in any event, Uncle Bob died with lots of other debts. So, if his estate is administered, all of his assets will go to pay back creditors and none will be payable to you or his other heirs. So, you and your family decide to do nothing and to just "walk away" from Uncle Bob's estate. Unfortunately, many months later you get a bill from Uncle Bob's homeowners association saying that you owe them lots of money. They may be right.

  In the case of Villas at Sone Mountain Condominium Association v. Blair, 311 Ga. App. 718 (2011), the Georgia Court of Appeals ruled that heirs of a deceased condominium owner can unwittingly become liable for ongoing association fees, even if they make no claim to their deceased relative's condominium.

  This is based on the concept, applicable under Georgia law, that when someone dies without a Will, title to his or her property automatically "vests" in his or her closest living relatives, until and unless a probate or administration proceeding are commenced. Georgia law applies a system of "descent and distribution" which identifies who your closets living relatives are at the time of your death. Those are the people who are intitled to inherit your assets if you leave no Will. This inheritance is automatic, especially with regard to real estate.  Condominium fees are owed by the owner of the condominium unit. In this scenario, you became the owner of Uncle Bob's condominium. So, unless you take affirmative steps to "renounce" your rights to Uncle Bob's estate, you automatically become liable for condominium fees accruing after the date of his death.... even if you have absolutely nothing to do with Uncle Bob or his condominium.  Such a renunciation, to be effective, must be filed within nine (9) months following the effective date of a gift or transfer (e.g. the date of Uncle Bob's death).

  So, you may unknowingly find yourself liable for association fees, even if you make no claim to a deceased relative's condominium property, or if you try to walk away from your debt to your own  Association and no foreclosure ensues.  If you find yourself in any of these situations, contact us. We may be able to help.                              

Contractors:  If you live in a condominium or cooperative community, and you discover defects in your home, under a new 2004 Georgia statute you cannot file suit against your builder without following certain mandatory mediation procedures.  This may be a 90-day process.

    Know that if you do have claims against your contractor, you need to be mindful of certain statutes of limitation that may apply.  Suits against contractors generally must be filed within 4 years after the cause of action arises.  In certain cases, if defects are intentionally concealed, that period may be extended. However, Georgia has a  "statute of repose" which requires that any claims be brought to court within 8 years, even if concealment  and/or delayed discovery are issues.  After 4 years, and especially after 8 years, you will likely lose your right to sue your contractor.

Corporations and Limited Liability Companies:  If you own a corporation or a limited liability company, as the end of the calendar year approaches, you need to consider if any changes need to be made to financial and/or legal arrangements which you have made for your company.  If your company operates on a calendar year basis, in order to qualify for deductions for the current year, you may need to make certain expenditures by year's end.  If your corporation needs to qualify or requalify as a Subchapter-S corporation (so that profits and losses flow through to your individual tax returns) or as C-Corporation (so that the corporation is treated as a separate taxable entity), you may need to make these decisions within 75 days following commencement of your new tax year in order to qualify for that year. If your limited liability company was set up as a single-member LLC, it may be treated as a sole proprietorship for tax purposes; which may or may not suit your particular needs. Please call us to discuss your particular needs further and/or contract your company's accountant.

    Remember that you need to file an organizational annual registration renewal with the Georgia Secretary of State between January 1 and April 1 of each year.  If you fail to do so, your company may be involuntarily dissolved.  You can accomplish this yourself at http://www.sos.ga.gov/corporations.  Or, we would be happy to do this for you.

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Landlord-Tenant & Foreclosure Law:  In the current real estate environment, more and more clients, both property owners and tenants, lenders and borrowers, are asking advice about leasing issues and about real estate mortgage foreclosures.  These are rapidly changing areas of Georgia law.  Landlords need to know, especially in residential settings, that they have to comply with the Georgia Residential Landlord-Tenant Act, which places some strict requirements on handling security deposits, making obligatory repairs, etc.  Tenants need to know the sorts of defenses which they can, and cannot, assert in dispossessory actions, including in situations where their landlords have been foreclosed upon.  Homeowners facing foreclosure need to know what their rights are concerning notice of foreclosure to which they are entitled, and post-foreclosure eviction proceedings. Lenders need to know the pitfalls of foreclosing and evicting mortgagors, including creative ways in which mortgagors can stall or delay such proceedings.  We provide services to landlords, tenants, lenders, and borrowers. Let us know how we can help.

Restrictive Covenants:  Non-compete agreements have historically been disfavored by the Georgia courts. They must generally be limited in terms of time, territorial scope, and activities prohibited.  Previously, Georgia has not followed the "blue pencil" rule of contract severability with regard to such contracts. If any provision of a non-compete agreement was invalid, then the entire non-compete agreement was generally deemed invalid. A new 2009 law, however, proposed to allow Georgia courts to modify a restrictive covenant that is otherwise unenforceable. This was submitted for state-wide constitutional referendum during the November 2010 mid-term elections and, after the 2011 General Assembly session, finally became effective in May 2011. This new law is effective for all employment contracts executed after such effective date.

As a consequence, for better or worse, restrictive covenants contained in employment contracts will now be much more enforceable in Georgia.  The "blue pencil" rule of contract severability has been adopted, effective in Georgia contracts signed after the effective date of the new law (May 11, 2011).

Employers, and lawyers representing employers, will likely be happy with the change.  Employees, and lawyers representing employees, will likely be unhappy with the change. In either case, Georgia judges now have the ability to limit the enforcement of otherwise overly broad restrictive covenants to provisions reasonably necessary to protect the employer's interests, instead of being forced to invalidate the entire restrictive covenant because of one "bad" clause.  This will likely result in more "fact" questions in litigation, generally favoring those parties with enough money to litigate such issues.

For attorneys more adept in such areas, it was previously much easier to review a restrictive covenant and counsel a client that "this contract probably is [or is not] enforceable" in Georgia. Now that advice will be much harder to give, since a judicial review of all attendant facts and circumstances will be more commonly required.

Realtors:  If you are a realtor, then you are probably already well aware of most of the statutes and regulations which govern your trade.  Non-realtors may not.  Many laypersons have misconceptions about what a realtor's role is in any real estate transaction.  First of all, there are generally buyer's agents, seller's agents, and dual (including "designated") agents.  Unless a specific buyer's agency or some form of a dual agency is agreed between the parties, realtors generally represent the seller, not the buyer.  This is true whether the realtor is a listing agent or a selling agent.  A realtor may not represent more than one party in a transaction without the express written consent of all parties.  If you hire or think you have hired a realtor, know what role they are playing and whose interests they represent. Get it in writing.

    Many people believe that realtors act as "fiduciaries," responsible for all aspects of getting a deal closed, from showing the property, putting together the contract, getting it signed, getting the property ready to close, etc. "Fiduciaries" are professionals like lawyers, who are held to considerably high standards concerning the duties of loyalty and fair dealing which they owe their clients.  In reality, though, realtors have very limited legal obligations, unless they expressly agree to take on special duties as part of their contracts with their clients.  In particular, the Georgia Brokerage Relationships in Real Estate Transactions Act declares that realtors are not fiduciaries. They generally have only those duties described by  statute or by contract.

    Realtors are generally deemed to have earned their fees when they put a willing seller together with a willing buyer, and a contract is signed. If you have expectations about what you think your realtor is supposed to do beyond that, you need to have clear communication with your realtor. Again, whatever you decide, put it in writing.

    One duty that realtors do have is the obligation to make certain disclosures to all parties in any real estate transaction. If a realtor has actual knowledge about property defects which would not reasonably be discovered by a diligent inspection of the property, the realtor must disclose those facts, even to the party(ies) whom the realtor does not represent.  This may even include adverse physical conditions in the immediate neighborhood of the subject property.

Sellers' Disclosures:  In a similar fashion, sellers of real estate have some disclosure obligations concerning property defects.  Historically, the governing rule has been that of caveat emptor, or "let the buyer beware."  But, decades of litigation have modified that rule somewhat.  First of all, if you are a builder of the property who is also the seller of the property, you have some heightened obligations.  Sellers who are builders can be sued for negligent construction.  Sellers who are builders can also be sued for failing to disclose latent defects. Sellers who are builders and who have specialized knowledge about the condition of the subject property, must disclose known defects which would not be readily discernible during a diligent inspection of the property by the buyer.

    Otherwise, ordinary sellers, however, are generally only responsible for fraud or for active concealment of defects. Sellers property disclosure reports are not required by Georgia law. However, if such a report is provided, sellers may not lie about their answers. Sellers may not intentionally cover up known defects. 

    Buyers also have obligations, however.  They must exercise reasonable diligence to protect themselves. They cannot hold a seller responsible for defects that would have been discovered by a reasonably diligent inspection of the property.

Tax Sales & Foreclosed Properties:  Also due to the current state of the economy, more and more investors are considering investing in tax sale and foreclosures properties. DO NOT BUY A PROPERTY AT A TAX OR FORECLOSURE SALE without getting advice from a competent attorney first. Otherwise, at least talk to someone who has done it.  Something real estate investment seminars often fail to mention are the costs necessary to "quiet" title to a property purchased at tax sale, so that the buyer can eventually convey marketable and insurable title.  Before buying foreclosure properties on the courthouse steps, a wise investor will perform an adequate due diligence investigation, including a title search. The first step is to sit down and talk with a lawyer about what you are planning to do.  Call us.

Wills, Trusts and Related Documents:  If you have never executed Wills, Trusts, Advance Healthcare Directives or similar documents, you need to consider doing so, in order to protect your family and loved ones, and to make sure your wishes are properly carried out, in the event of your death or incapacity.  If you don't make these decisions for yourself, then you leave it to Georgia law to determine how your affairs and medical care may be handled; which may not suit your particular needs.  If you have already executed Wills, Trusts, Advance Healthcare directives and similar documents, you should review those documents periodically to make sure they still suit your particular situation. 

    Effective July 1, 2007, "Advance Healthcare Directives" replaced Georgia Living Wills and Durable Powers of Attorney for Healthcare. The new forms are much more thorough than documents you may have previously signed.  Living Wills and Durable Powers of Attorney for Healthcare properly executed prior to July 1, 2007 are still valid. Such documents even executed after July 1, 2007 might still be valid. But, you would be well-advised to have any such documents reviewed by your attorneys to make sure they were properly executed.  You should also review whatever documents you have executed to make sure no changes need to be made to the list of persons you may have appointed to make decisions for you in such documents, or to the specific directions you have given. We'd be happy to help. But, even if you don't utilize our services in those regards, please have your documents reviewed by another competent legal adviser.

Whenever we perform estate planning work for our clients, we ask that they first complete an Estate Planning Questionnaire. To download an Estate Planning Questionnaire (in Word format) please click the link below. Please complete this form as fully as possible and then call our office to set up an appointment for a formal consultation in our office.  Please bring the completed form with you at the time of your appointment.

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