Atlanta litigators Matthew Ames, Walt Jones, and Jamie Cohen recently received a favorable decision from the Georgia Supreme Court, which confirmed the rule that a secured creditor cannot be forced to accept possession of the collateral in satisfaction of an indebtedness when the creditor did not, in fact, seek this relief. In Hamilton State Bank v. Nelson, et al., S14A1892, (Ga. Feb. 16, 2015), the Georgia Supreme Court held that, under Georgia law, the mere tender of possession of collateral by a debtor to a creditor does not transfer possession unless and until possession is accepted by the transferee. In support of its holding, the Georgia Supreme Court referenced several landlord-tenant cases holding that a tenant’s abandonment of possession of the leased premises does not in and of itself operate as a “surrender” of the premises, unless and until the landlord accepts the surrender, as well. In Nelson, the trial court directed the borrowers to tender possession of the property to the Bank, which the Supreme Court held was not tantamount to effectively transferring possession of the property unless the creditor accepted the tender. While this makes practical sense (since a tenant or mortgagor cannot simply hand over his keys to a landlord or lender and effectively transfer possession of the leased or mortgaged property), it is helpful for lenders to see this position solidified by the Georgia Supreme Court.
