M. G. Greer, as trustee for the Watkins Drive Trust, purchased certain Cherokee County real property (the “Property”) at a nonjudicial foreclosure sale. The Provident Bank, Inc. subsequently sued the Trust seeking a declaration that Provident held a first priority lien against the Property. Following our grant of its application for interlocutory appeal, the Trust appeals the trial court’s order denying its motion for summary judgment. We affirm for the reasons set forth below.
To prevail on a motion for summary judgment, the moving party must demonstrate that there is no genuine issue of material fact, and that the undisputed facts, viewed in a light most favorable to the party opposing the motion, warrant judgment as a matter of law. OCGA§ 9-11-56 (c);
Lau’s Corp. v. Haskins,
(1) The EquiCredit lien. On January 30, 2001, Norman and Genie Johansen executed a deed to secure a $322,500 note to EquiCredit.
(2) The Oakmont lien. On May 30, 2002, Norman Johansen executed a deed to secure a $45,000 note to Oakmont Mortgage Company, Inc.
(3) The Alfa lien. On July 10, 2002, the Johansens executed a deed to secure a $35,950 note to Alfa Management Group, LLC.
(4) The Provident lien. On August 26, 2002, Norman Johansen executed a deed to secure a $403,750 note to Provident.
The proceeds of the note secured by the Provident lien were used in part to satisfy the EquiCredit lien and the Oakmont lien. Provident’s vice-president averred that Provident and the Property owner, Norman Johansen, intended for Provident to hold the first priority lien against the Property based on its satisfaсtion of the EquiCredit and the Oakmont liens. Although the Alfa lien had previously been filed with the clerk on July 25, 2002, it was not indexed in the county real property records until October 7, 2002. Thus, Provident’s review of the real property records did not disclose the existence of the Alfa lien before its filing of the Provident lien with the clerk on September 10, 2002.
The Johansens defaulted on the note secured by the Alfa lien. Alfa exercised the power of sale contained in its lien and transferred title of the Property to the Trust as the highest bidder at a public sale under a “DeedAfter Foreclosure Under Power of Sale” dated January 7, 2003. The trust paid $42,500 for the Property. After Johansen defaulted on the note secured by the Provident lien, Provident searched the county real property records and discovered the deed after foreсlosure in favor of the Trust.
Provident subsequently brought this action against the Trust seeking an injunction against the sale of the Property and a declaration that the Provident lien was superior to the Trust’s interest and in an amount equal to the amounts advanced by Provident for purposes of satisfying the EquiCredit and the Oakmont liens. At issue is whether Provident may be equitably subrogated to the lien rights of EquiCredit and Oakmont. If equitable subrogation is not аvailable, then the Trust is entitled to summary judgment because
the Provident lien was filed after the Alfa lien. See
Massey Assoc. v. Whitehorse Inns of Ga.,
The principle of equitable subrogation has long been recognized in this State. See
Merchants & Mechanics Bank v. Tillman,
Where one advances money to pay off an encumbrance on realty either at the instance оf the owner of the property or the holder of the encumbrance, either upon the express understanding or under circumstances under which an understanding will be implied that the advance made is to be secured by the senior lien on the property, in the event the new security is for any reason not a first lien on the property, the holder of the security, if not chargeable with culpable or inexcusаble neglect, will be subrogated to the rights of the prior encumbrancer under the security held by him, unless the superior or equal equity of others would be prejudiced thereby; knowledge of the existence of an intervening encumbrance will not alone prevent the person advancing the money to pay off the senior encumbrance from claiming the right of subrogation where the exercise of such right will not in any substantial way prejudice the rights of the intervening encumbrancer. . . .
The undisputed facts in this case do not show that the Trust is entitled to prevail as a matter of law on Provident’s equitable subrogation claim. Evidence supports Provident’s claim that it advanced monies for the purpose of paying off the EquiCredit lien and the Oakmont lien with the understanding that the Provident lien would become the first priority lien against the Property. Evidence also demonstrates thаt Provident had constructive notice, but not actual notice, of the prior filed Alfa lien. See
Leeds Bldg. Products v. Sears Mtg. Corp.,
The Trust argues thаt equitable subrogation cannot be applied to the detriment of a purchaser at a nonjudicial foreclosure sale. However, Provident does not seek to set aside the deed aftеr foreclosure. Rather, it seeks to succeed to the priority of the EquiCredit and Oakmont liens, so that the Trust holds title to the Property subject to Provident’s lien. “[U]nder our recording statutes, if the lien is properly recorded so as to give constructive notice of its existence to all would-be transferees, then the transferee has notice of the lien, and the transferred property in his possession is subject to the lien.”
Kilgore v. Buice,
The Trust further contends that it stands in the position of a bonа fide purchaser for value, and should be protected for that reason. “A grantee in a security deed who acts in good faith stands in the attitude of a bona fide purchaser, and is entitled to the samе protection.” (Citation and punctuation omitted.)
Bonner v. Norwest Bank Minnesota,
The Trust also argues that it is entitled to prеvail because the Alfa lien appeared to be senior in priority when it purchased the Property. “The senior secured party is estopped from being reinstated
to its senior status where the intеrvening lienholder has taken or purchased the lien in reliance upon his apparent status as senior lienor.”
Davis,
Viewing the evidence most favorably to Provident, as the nonmovant, it appears that the Trust was on notice of the facts underlying Provident’s equitable subrogation claim and could not reasonably expect that its purchase of the Property would be free оf prior encumbrances. Accordingly, we cannot say that as a matter of law the Trust would be substantially prejudiced if Provident was subrogated to the position of the first priority lienholder. See
Flournoy Plumbing Co. v. Home Owners Loan Corp.,
We conclude, therefore, that the Trust has not established as a matter of law that the application of the principle of equitable subrogation will impair its superior or equal equity, nor that the Trust would be unduly prejudiced thereby. The Trust has similarly failed to show that as a matter of law Provident was culpably and inexcusably negligent. It follows that the trial court did not err in denying the Trust’s motion for summary judgment.
Judgment affirmed.