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§ 544(a)(3)

In re Aulicino

Ruling
Tenancy by the entireties interest in property prevented trustee from claiming interest.
Procedural posture

Debtor filed a petition under chapter 7 of the Bankruptcy Code, and movant, the debtor's former spouse, filed a motion for relief from the automatic stay that was imposed when the debtor declared bankruptcy. The chapter 7 trustee opposed the motion, claiming that he had an interest under 11 U.S.C.S. § 544(a)(3) in a house the debtor and her former spouse owned as tenants by the entireties that trumped the former spouse's interest.

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Consumer opinion summary, case decided on December 02, 2008 , LexisNexis #0309-121

In re Sickels

Ruling
Objection to recission of reaffirmation agreement on grounds of mutual mistake overruled.
Procedural posture

When debtors, a married couple who had filed a chapter 7, attempted to rescind a reaffirmation agreement that they had executed with a credit union that held an unrecorded mortgage on their residence, on the ground of mutual mistake, the credit union objected. At issue, inter alia, was whether the statutory period for rescission under 11 U.S.C.S. § 524(c) had expired.

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Consumer opinion summary, case decided on November 20, 2008 , LexisNexis #0109-081

Barnhills Buffets Inc. v. SCS Gen. Contrs. Inc. (In re Barnhills Buffets Inc.)

Ruling
Contractor's equitable lien against debtor's leasehold interest in properties terminated on petition date.
Procedural posture

Defendant, a secured creditor of a chapter 7 debtor, and cross-defendant, a company that was alleged to be the debtor's alter ego, filed motions for summary judgment in defendant and counterplaintiff contractor's action, alleging that it had equitable liens against the leasehold interests of the debtor and the fee interests of the lessors, and that the company should be held jointly and severally liable with the debtor on the contractor's claims.

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Commercial opinion summary, case decided on November 19, 2008 , LexisNexis #0109-082

Argent Mortg. Co. LLC v. Drown (In re Bunn)

Ruling
Mortgage with sufficient property identification to create constructive notice under state law was not avoidable.
Procedural posture

Defendant mortgage creditor appealed from an order of the bankruptcy court for the Southern District of Ohio, that held that the plaintiff, the chapter 7 trustee, could avoid the debtor's mortgage under 11 U.S.C.S. § 544(a)(3), because the face of the mortgage contained a street address and a parcel number, but did not contain a legal description of the debtor's residential property.

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Consumer opinion summary, case decided on September 30, 2008 , LexisNexis #1208-097

Noland v. Wells Fargo Bank (In re Williams)

Ruling
Bank's failure to record assignment of mortgage was not grounds for avoidance.
Procedural posture

Debtors filed a petition under chapter 7 of the Bankruptcy Code, and plaintiff trustee was appointed to represent the bankruptcy estate. The trustee filed an adversary proceeding against defendants, a mortgage company and a bank, seeking a judgment avoiding a mortgage lien the bank held on the debtors' property, pursuant to 11 U.S.C.S. § 544(a)(3), disallowance of the bank's claim against the estate. The bank filed a motion to dismiss.

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Consumer opinion summary, case decided on September 29, 2008 , LexisNexis #1008-080

Ridings at Brandywine Assocs. LP v. Citizens Bank

Ruling
Debtor who filed after mortgage was recorded could not avoid the mortgage as a bona fide purchaser for value.
Procedural posture

Plaintiff chapter 11 debtor filed an adversary proceeding against defendant bank, seeking a judgment declaring that a mortgage the debtor gave the bank before the debtor declared bankruptcy was null and void under 21 Pa. Stat. Ann. § 444, and reclassifying the mortgage as an unsecured claim, and that it could avoid the bank's mortgage under 11 U.S.C.S. § 544(a)(3). The bankruptcy court dismissed the action, and the debtor appealed.

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Commercial opinion summary, case decided on August 29, 2008 , LexisNexis #0908-085

Boling v. Boling (In re Boling)

Ruling
Usurious and unenforceable loan extended but not recorded prior to petition date was deemed perfected and could not be avoided.
Procedural posture

Defendants, debtors in two separate chapter 7 filings, sought a determination that a loan from plaintiff lender was usurious and unenforceable under Fla. Stat. ch. 687. The lender sought, in two separate adversary proceedings, a determination that any debt due to him was not dischargeable, and sought a modification of the automatic stay to obtain nunc pro tunc recording of his mortgages. The trustee sought to avoid the loan obligation.

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Consumer opinion summary, case decided on July 24, 2008 , LexisNexis #0808-137

Riley v. Sullivan (In re Sullivan)

Ruling
Mortgage that remained unrecorded on petition date could be avoided.
Procedural posture

Plaintiff trustee filed an adversary proceeding against defendants, a chapter 7 debtor and a mortgagee, seeking a judgment determining the extent of defendants' interests in real property. The U.S. Bankruptcy Court for the District of Massachusetts found that the trustee could avoid a mortgage the debtor gave the mortgagee, pursuant to 11 U.S.C.S. § 544(a), that the mortgage became part of the debtor's bankruptcy estate. The debtor appealed.

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Court :
Judge or Jurisdiction information not available
Consumer opinion summary, case decided on May 09, 2008 , LexisNexis #0608-097

Burden v. Branch Banking & Trust Co. (In re Potter)

Ruling
Improperly recorded mortgage avoided as not providing notice to trustee as bona fide purchaser.
Procedural posture

Defendant debtors filed for relief under chapter 13 of the Bankruptcy Code. Plaintiff trustee filed an adversary proceeding to avoid a mortgage lien held by defendant creditor, pursuant to 11 U.S.C.S. § 544(a). The trustee and the creditor filed motions for summary judgment.

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Consumer opinion summary, case decided on March 05, 2008 , LexisNexis #0308-121

Accredited Home Lenders Inc. v. Lauver (In re Lauver)

Ruling
Erroneous recording of mortgage satisfaction did not release mortgage that was listed on debtor's schedules.
Procedural posture

Plaintiff creditor sought to have stricken from the record a mortgage satisfaction piece indicating that a mortgage that defendant chapter 7 debtors granted it was satisfied.

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opinion summary, case decided on July 24, 2007 , LexisNexis #0807-136