- Case Type:
- Consumer
- Case Status:
- Reversed and Remanded
- Citation:
- 18-1355 (10th Circuit, Sep 28,2021) Published
- Tag(s):
-
- Ruling:
- Under section 547(b) and Colorado law, a deed of trust filed after the debtor transferred title to property, even if the transfer is to a trust controlled by the debtor, does not become a transfer until the re-vesting of title in the debtor. Thus, a deed of trust that was filed on March 4, 2013, months after a mortgage loan was made, did not become a transfer until August 3, 2015, when the property was transferred back to the debtor.
- Procedural context:
- The chapter 7 trustee for Diann Marie Cates' chapter 7 estate sued to have a transfer of real property -- the recording of a deed of trust -- avoided under § 547(b). The bankruptcy court ruled against the trustee, holding that the transfer occurred long before the 90-day window of § 547(b). The trustee appealed, and the Bankruptcy Appellate Panel affirmed.
The trustee then appealed to the Court of Appeals.
- Facts:
- Diann Marie Cates, the debtor, executed a $135,000 promissory note payable to L. Edmund and Jann Redele Cates. The note was secured by a deed of trust on Cates' property in Durango, Colordo. The note was executed on October 12, 2012. The deed of trust was recorded on March 4, 2013.
During the period between executing the note and the recording of the deed of trust, Cates created the Diann M. Cates Family Trust -- which is a self-settled, revocable trust -- and quitclaimed her deed to the Durango property to the trust. The quitclaim deed was promptly recorded.
On August 3, 2015, only eight days before she filed her chapter 7 petition, Cates' revocable trust reconveyed the Durango property back to Cates by quitclaim deed. That deed was recorded the same day.
Cates' schedules listed the Durango property as having a value of $187,000 and was subject to the full amount of the debt to L. Edmund and Jann Redele Cates.
The Bankruptcy Appellate Panel affirmed the holding of the bankruptcy court but concluded that the transfer was unavoidable under § 547(e)(2) and (e)(1). The BAP determined that a bona fide purchaser which could have purchased the Durango property would have had notice of the deed of trust. Thus, the relevant date for the § 547 analysis was March 4, 2013, notwithstanding the transfer of the Durango property from Cates to her trust before that date.
- Judge(s):
- HOLMES, BRISCOE, and EID
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