Title 44, Chapter 14, Section 13
(a) As used in this Code section, the term:
(1) "Borrower" means the maker of the promissory note evidencing
the loan to be delivered at the loan closing.
(2) "Collected funds" means funds deposited, finally settled, and
credited to the settlement agent's escrow account.
(3) "Disbursement of settlement proceeds" means the payment of all
proceeds of the transaction by the settlement agent to the persons
(4) "Lender" means any person or entity regularly engaged in
making loans secured by mortgages or deeds to secure debt on real
(5) "Loan closing" means the time agreed upon by the borrower and
the lender when the execution and delivery of loan documents by
the borrower occurs.
(6) "Loan documents" means the note evidencing the debt due to the
lender, the deed to secure debt or mortgage securing the debt due
to the lender, and any other documents required by the lender to
be executed by the borrower as part of the transaction.
(7) "Loan funds" means the gross or net proceeds of the loan to be
disbursed by or on behalf of the lender at the loan closing.
(8) "Party" or "parties" means the seller, purchaser, borrower,
lender, and settlement agent, as applicable to the subject
(9) "Settlement" means the time when the settlement agent has
received the duly executed deed to secure debt and other loan
documents and funds required to carry out the terms of the
contracts between the parties.
(10) "Settlement agent" means the person responsible for
conducting the settlement and disbursement of the settlement
proceeds and includes any individual, corporation, partnership, or
other entity conducting the settlement and disbursement of the
(b) This Code section applies only to transactions involving
purchase money loans made by a lender, or loans made to refinance,
directly or indirectly, a purchase money loan made by another
lender, which loans will be secured by deeds to secure debt or
mortgages on real estate containing not more than four residential
dwelling units, whether or not such deeds to secure debt or
mortgages have a first-priority status.
(c) Except as otherwise provided in this Code section, a settlement
agent shall not cause a disbursement of settlement proceeds unless
such settlement proceeds are collected funds. Notwithstanding that
a deposit made by a settlement agent to its escrow account does not
constitute collected funds, the settlement agent may cause a
disbursement of settlement proceeds from the escrow account in
reliance on such deposit under any of the following circumstances:
(1) The deposit is either (A) a check or draft representing the
loan funds issued by, (B) a certified check, cashier's check, or
treasurer's check issued by or drawn on, or (C) other similar
primary obligation of a federally insured bank, savings bank,
savings and loan association, or credit union or of any holding
company or wholly owned subsidiary of any of the foregoing;
(2) The deposit is either a check or draft issued by a lender
approved by the United States Department of Housing and Urban
(3) The deposit is a check issued by a lender qualified to do
business in Georgia;
(4) The deposit is a check drawn on the escrow account of an
attorney licensed to practice law in the State of Georgia or on
the escrow account of a real estate broker licensed under Chapter
40 of Title 43, if the settlement agent has reasonable and prudent
grounds to believe that the deposit will constitute collected
funds in the settlement agent's escrow account within a reasonable
(5) The deposit is a check issued by the United States of America
or any agency thereof or the State of Georgia or any agency or
political subdivision of the State of Georgia; or
(6) The deposit is a personal check or checks in an aggregate
amount not exceeding $5,000.00 per loan closing.
For purposes of this Code section, disbursement of settlement proceeds shall only be made from the proceeds of any of the instruments described in paragraphs (1) through (6) of this subsection if such instruments are negotiable instruments in accordance with the provisions of Code Section 11-3-104.
(d) The lender shall at or before the loan closing deliver loan
funds to the settlement agent either in the form of collected funds
or in the form of a negotiable instrument described in any of
paragraphs (1) through (3) of subsection (c) of this Code section,
provided that the lender must cause such instrument to be honored
upon presentment for payment to the bank or other depository
institution upon which such instrument was drawn.
(e) Any party violating this Code section shall be liable to any
other party suffering a loss due to such violation for such other
party's actual damages plus reasonable attorneys' fees. In
addition, any party violating this Code section shall pay to the
borrower an amount of money equal to $1,000.00 or double the amount
of interest payable on the loan for the first 60 days after the loan
closing, whichever is greater.