Two documents, two jobs
Residential financing always uses a pair of instruments, and the exam tests whether you can keep them straight. The note is the debt. The security instrument is the collateral for that debt.
The promissory note
The note is the borrower's written promise to pay and is the evidence of the debt. Only the maker signs it — the lender does not sign the note. The note is never recorded.
The Georgia security deed
The security deed pledges the real estate. It is recorded, and recording is what gives notice and establishes lien priority. So the trap answer that "the note must be recorded first" fails twice: the note is not recorded at all, and the deed is.
Georgia rule: Georgia is a title-theory state. The security deed is an absolute conveyance that passes legal title to the lender as grantee, and title reverts to the grantor when the debt is paid. By statute it shall not be held to be a mortgage. That is why Georgia foreclosures are ordinarily non-judicial under a power of sale. In lien-theory mortgage states the instrument creates only a lien and title stays with the borrower; in deed-of-trust states title goes to a neutral trustee. Georgia uses neither.
Due-on-sale and Garn-St Germain
The Garn-St Germain Act makes due-on-sale clauses federally enforceable, but bars the lender from accelerating on listed residential transfers: a lease of three years or less with no option to purchase, junior liens, transfers to a spouse or children, and transfers into a living trust where the borrower remains beneficiary and occupant.
An outright sale to an unrelated buyer is exactly what the clause targets. A sale to the borrower's business partner is an ordinary sale to a non-relative and is not protected. A contract for deed is tempting because the seller keeps legal title, but no exception covers it, so the clause can be triggered.