Q: What is the difference between a mortgage and a security deed?

A: At closing for purchase or refinance of real estate, a borrower will usually execute a promissory note agreeing to pay the lender a specific amount of money over a given period of time according to the terms and conditions of the note. In order to protect its interests, the lender, depending on the state in which the real estate is located, will require the borrower to execute a mortgage, security deed or similar document.

A mortgage is an interest in real estate created by a written document providing security to a lender for the performance under the terms of a note. The legal title to the property remains with the borrower, while the lender has an interest inthe real estate to the extent of the amount of the note.

A security deed is similar but transfers legal title to the lender for the term of the note.

In the event of default by a borrower, a security deed provides the lender an opportunity to foreclose or seize the property without having to take the borrower to court. The mortgage also allows foreclosure but requires that the lender use a judicial foreclosure process to convert its interest in the real estate into legal title.

In Georgia, borrowers execute a security deed. But in New York, for example, borrowers execute a mortgage. While both a mortgage and security deed require the lender to provide notice to the borrower in the event of default, the foreclosure process is usually quicker through a security deed.

This column is designed to provide information in regard to the subject matter covered. It is not intended to render legal advice.

Q: What is foreclosure?

A: A legal process whereby property pledged as security for a debt is sold to satisfy a debt in the event of a default in payments or terms.

— By Patrick I. Lucas, associate with Weinstock & Scavo, PC in Atlanta, plucas@wslaw.net

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