Goddard v. Heldt (In re Heldt)
- Summarized by Brendan Gage , Goulston & Storrs PC
- 12 years 9 months ago
- Citation:
- No. 12-6027 (10th Cir. May 14, 2013)
- Tag(s):
-
- Ruling:
- Affirming the judgment of the bankruptcy court (“BC”), the Tenth Circuit held that a trustee was disqualified from exercising the powers of a hypothetical bona fide purchaser (“BFP”) under § 544(a)(3) to avoid a resulting trust in favor of the debtor’s mother who held equitable title to real property conveyed by the debtor. The trustee was not a BFP because the mother’s long-standing, open and unambiguous possession of the property was sufficient to constitute constructive notice of her interest under state law. Furthermore, the BC’s finding that the debtor only held bare legal title to transferred property was not clearly erroneous. When the mother originally transferred the property to her daughter the mother paid the purchase price for the property. Therefore, under applicable state law, the presumption was that the mother transferred the property as an estate planning device, not as a gift to her daughter. Finally, the BC did not abuse its discretion applying the doctrine of unclean hands.
- Procedural context:
- The trustee appealed the district court’s order affirming the BC. In addition to the findings above, the BC held that the debtor’s conveyance of real property for no consideration could not constitute a fraudulent transfer under § 548(a)(1) because the debtor only held bare legal title to the transferred property. Property in which the debtor holds bare legal title is not property of the estate under § 541(d) and the recipient of such property receives essentially nothing of value from the debtor
- Facts:
- A mother transferred the title of her residence to her thirteen-year-old daughter. The mother paid the full purchase price and continued to live at the residence with her daughter. The mother paid all of the taxes, utilities, and expenses associated with the property. Seventeen years after the mother conveyed the property, the daughter filed for Chapter 7 bankruptcy protection. Within a year prepetition, the daughter transferred the property to her sister for no consideration. The trustee moved to set aside the transfer under §§ 544(a)(3) and § 548(a)(1).
- Judge(s):
- Lucero, Anderson, and Baldock, Circuit Judges.
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