HB 555: Georgians First Residential Property Protection Act; enact

The House Committee on Judiciary offers the following substitute to HB 555:

A BILL TO BE ENTITLED

AN ACT

To amend Chapter 3 of Title 44 of the Official Code of Georgia Annotated, relating to regulation of specialized land transactions, so as to prohibit business enterprises from owning an interest in more than 2,000 single-family residential properties or ten multifamily residential properties; to provide a private cause of action against a business enterprise that owns an interest in more than 2,000 single-family residential properties or ten multifamily residential properties; to provide for public sale of residential properties unlawfully owned by business enterprises; to prohibit the leasing of residential properties unlawfully owned by business enterprises; to provide for the forfeiture of rental payments paid in connection with an unlawful lease of residential property; to provide a private cause of action for the return of rental payments paid in connection with an unlawful lease of residential property; to provide for the disclosure of information by brokers; to provide an effective date; to provide a short title; to provide for related matters; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.

This Act shall be known and may be cited as the "Georgians First Residential Property Protection Act."

SECTION 2.

Chapter 3 of Title 44 of the Official Code of Georgia Annotated, relating to regulation of specialized land transactions, is amended by adding a new article to read as follows: "ARTICLE 8

44-3-260.

As used in this article, the term:

(1) 'Affiliate' means any entity that directly or indirectly owns or controls, is owned or controlled by, or is under any other common ownership or control with a business enterprise.

(2) 'Business enterprise' means any corporation, association, partnership, limited liability company, limited partnership, trust, issuer, or other private legal entity organized under the laws of this state, the United States, the District of Columbia, or any other state, territory, or dependency of the United States or under the laws of a foreign country.

(3) 'Claimant' means an aggrieved person who seeks recovery of damages under this article; provided, however, such term shall not include a government entity or any officer or employee of a government entity acting in his or her official capacity.

(4) 'Government entity' means any office, agency, authority, department, commission, board, body, division, instrumentality, or institution of the executive, legislative, or judicial branch of the state government or of any political subdivision within this state.

(5) 'Multifamily residence' means a parcel of real property that has upon it a structure that contains four or more individual dwelling units, each of which is designed exclusively for use and occupation by one family.

(6) 'Residential property' means a single-family residence or a multifamily residence, including all improvements thereon.

(7) 'Single-family residence' means a parcel of real property that has upon it a:

(A) Detached residential structure that contains between one and three individual dwelling units, each of which is designed for the exclusive use and occupation by one family;

(B) Townhouse; or

(C) Condominiums as defined in Code Section 44-3-71.

(8) 'Townhouse' means an individual residential dwelling unit within a larger structure that contains two or more attached residential dwelling units constructed in a row where each residential dwelling unit is designed exclusively for use and occupation by one family, is located on an individual lot or parcel, and shares at least one common wall with an adjacent unit.

44-3-261.

(a) On and after January 1, 2026, it shall be unlawful for any business enterprise to obtain, own, or possess, directly or indirectly, including, but not limited to, through one or more affiliates of such business enterprise, an interest in more than 2,000 single-family residences or more than ten multifamily residences located in this state. (b)(1) For purposes of this Code section, an interest in residential property shall not include a deed to secure debt, security deed, mortgage, security interest, deed of trust, or other lien upon residential property that secures a debt or other obligation, and nothing in this Code section shall be construed as prohibiting a business enterprise from owning or acquiring a deed to secure debt, security deed, mortgage, security interest, deed of trust, or other lien upon residential property located in this state.

(2) An interest in residential property acquired pursuant to the enforcement of a deed to secure debt, security deed, mortgage, security interest, deed of trust, or other lien described in paragraph (1) of this subsection by a business enterprise that would otherwise violate subsection (a) of this Code section shall not constitute a violation of subsection (a) of this Code section, provided that such interest in residential property is sold or otherwise transferred to another person by the business enterprise within two years from the date such interest is acquired.

44-3-262.

(a) Any claimant may bring a civil action in any court of competent jurisdiction against a business enterprise that obtains, owns, or possesses an interest in residential property in violation of subsection (a) of Code Section 44-3-261 to recover:

(1) The greater of:

(A) Actual damages caused by such violation; or

(B) Statutory damages in the amount of $15,000.00 for each violation; and

(2) The costs incurred by the claimant in bringing such action, including reasonable attorney's fees.

(b) For purposes of this Code section, each residential property for which a business enterprise or shareholder of a business enterprise obtains, owns, or possesses an interest in violation of subsection (a) of Code Section 44-2-261 shall constitute separate violations.

(c) It shall be an affirmative defense to an award of monetary relief in an action brought pursuant to subsection (a) of this Code section if the defendant business enterprise in such action can demonstrate that:

(1) The claimant who brought such action can only recover statutory damages under paragraph (1) of subsection (a) of this Code section;

(2) It has, during the pendency of such action or no more than 30 days prior to the initiation of such action, paid a judgment for the full amount of statutory damages provided under subparagraph (B) of paragraph (1) of subsection (a) of this Code section that was awarded in a separate action brought pursuant to subsection (a) of this Code section for the same violation of subsection (a) of Code Section 44-3-261 giving rise to the current action; and

(3) It no longer owns or possesses an interest in the residential property that is the subject of such action.

(d) An action pursuant to subsection (a) of this Code section shall be brought within four years from the last day a business enterprise obtained, owned, or possessed an interest in residential property in violation of subsection (a) of Code Section 44-3-261 and such action may be brought in a representative capacity and may be the subject of a class action under Code Section 9-11-23.

(e) Notwithstanding any provision of law to the contrary, the following shall not be a defense to an action brought pursuant to subsection (a) of this Code section:

(1) Ignorance or mistake of law;

(2) The business enterprise's reliance on any court decision that has been overruled on appeal or by a subsequent court, even if such court decision had not been overruled at the time the business enterprise violated the provisions of subsection (a) of Code Section 44-3-261;

(3) The business enterprise's reliance on any state or federal court decision that is not binding on the court where such action has been brought;

(4) Non-mutual issue preclusion or non-mutual claim preclusion; or

(5) Any claim that the enforcement of this Code section or the imposition of civil liability against the business enterprise would violate the constitutional rights of third parties.

(f) Notwithstanding any provision of law to the contrary, no government entity or any officer or employee of a government entity acting in his or her official capacity, including, without limitation, the Attorney General, any district attorney, or any city or county attorney, shall be entitled to intervene in an action brought pursuant to subsection (a) of this Code section; provided, however, that nothing in this subsection shall prohibit the filing of an amicus curiae brief in such action.

44-3-263.

(a) An interest in residential property that is owned or possessed by a business enterprise in violation of subsection (a) of Code Section 44-3-261 shall be subject to public sale as provided in this Code section.

(b)(1) The Attorney General or any district attorney may bring an action against a business enterprise that owns or possesses an interest in residential property in violation of subsection (a) of Code Section 44-3-261 for an order directing a public sale of such interest by filing a petition for public sale in the superior court where the property is located. All parties that have an interest in the residential property shall be joined as parties to such action and shall be served with process in accordance with Code Section 9-11-4.

(2) The superior court where an action is brought pursuant to this Code section shall, after notice and hearing, order a public sale of an interest in residential property if it determines that such interest is owned or possessed in violation of subsection (a) of Code Section 44-3-261, that divestment of such interest is necessary to enforce the provisions of this article, and that such public sale would not be unjust or otherwise inequitable. In the event the court orders a public sale, the court shall appoint one or more persons as commissioners to conduct such sale under such regulations and upon such just and equitable terms as it may prescribe. The sale shall take place on the first Tuesday in the month, shall be at the place of public sales in the county in which the property is located, and shall be advertised in the official newspaper of the county once a week for four consecutive weeks. Neither the business enterprise against whom the action was filed pursuant to this Code section nor any affiliate of such business enterprise shall be entitled to purchase the interest in residential property at the public sale.

(3) After a public sale of an interest in residential property is conducted pursuant to this Code section, the proceeds derived from such sale shall be paid into the registry of the superior court that ordered such sale. The court shall then disburse the proceeds as follows:

(A) First, proceeds shall be applied to the reasonable costs associated with the public sale of the interest in residential property;

(B) Thereafter, proceeds shall be disbursed to any person with a superior interest in such proceeds to that of the business enterprise against whom the action for public sale was brought pursuant to this Code section, including, without limitation, any person that is owed an outstanding debt or other obligation that is secured by a deed to secure debt, security deed, mortgage, security interest, deed of trust, or other lien upon the interest in residential property, in order of priority as provided by law; and

(C) Thereafter, any remaining proceeds shall be disbursed to the business enterprise against whom the action for public sale was brought pursuant to this Code section less the costs incurred by the Attorney General or district attorney in bringing such action, including reasonable attorney's fees.

(4) The public sale of an interest in residential property pursuant to this Code section shall not extinguish any rights of persons in the property other than the business enterprise against whom the action for public sale was filed pursuant to this Code section, including, without limitation:

(A) Any person that is owed an outstanding debt or other obligation that is secured by a deed to secure debt, security deed, mortgage, security interest, deed of trust, or other lien upon the interest in residential property that is not satisfied from the sale proceeds disbursed pursuant to paragraph (3) of this subsection; and

(B) Any person with a leasehold interest in the residential property; provided, however, that there shall be no automatic renewal of such leasehold interest and any term in the lease agreement providing such automatic renewal shall be void and unenforceable.

44-3-264.

(a) No business enterprise that owns an interest in residential property in violation of subsection (a) of Code Section 44-3-261 shall enter into a lease agreement with another person for the lease of such residential property.

(b) A business enterprise that enters into a lease agreement in violation of subsection (a) of this Code section shall not be entitled to collect rental payments in connection with such lease and any rental payments collected in connection with such lease shall be subject to forfeiture in accordance with the procedures set forth in Chapter 16 of Title 9, the 'Georgia Uniform Civil Forfeiture Procedure Act.'

(c) Any person who makes rental payments to a business enterprise in connection with a lease agreement that was entered into by a business enterprise in violation of subsection (a) of this Code section may bring an action against such business enterprise in any court of competent jurisdiction for the return of such rental payments paid by such person.

(d) Nothing in this Code section shall be construed as impairing or otherwise limiting the leasehold interest of a lessee of a residential property pursuant to a lease agreement that was entered into by a business enterprise in violation of subsection (a) of this Code section.

44-3-265.

A broker who is engaged by a client that is a business enterprise and that is a prospective buyer or prospective lessor of an interest in residential property shall timely disclose to such client the prohibitions set forth in this article. For purposes of this Code section, the terms 'broker,' 'client,' and 'timely' shall have the same meanings as set forth in Code Section 10-6A-3."

SECTION 3.

This Act shall become effective upon its approval by the Governor or upon its becoming law without such approval.

SECTION 4.

All laws and parts of laws in conflict with this Act are repealed.