- Case Type:
- Case Status:
- 18-1650 (3rd Circuit, Sep 12,2019) Published
- Affirmed district court and bankruptcy court ruling voiding a transfer of real estate title conducted via the New Jersey tax foreclosure proceedings as preferential under 11 U.S.C 547(b). The Court rejected the tax lien purchaser's argument that a lawfully conducted state tax foreclosure could not constitute a voidable preference under 547(b) based on the principles of BFP v. Resolution Trust Corp. The Court also rejected the argument that voiding the transfer violated the Tax Injunction Act.
- Procedural context:
- Two months after the tax lien foreclosure judgment was final, the homeowners filed a Chapter 13 petition and the same day filed an adversary proceeding against the tax lien owner/defendant (Arianna Holdings Company, LLC) to avoid the transfer of the property to Arianna through the New Jersey tax sale foreclosure as a preferential transfer. The Bankruptcy Court found the transfer met all of the requirements of 11 U.S.C. 547(b). It also rejected Arianna's argument that voiding the transfer violated the Tax Injunction Act. The District Court affirmed and Arianna appealed to the Third Circuit.
- The homeowners failed to pay real estate taxes on their home. In 2013, the Town held a tax sale and a third party was the successful bidder. The third party assigned its certificate to the defendant (Arianna) in 216, who proceeded with a foreclosure action. The homeowners did not redeem and final judgment entered in 2015 vesting title to Arianna. T
- McKee, Porter and Roth
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