In re Mainline Equipment, Inc., No. CC-14-1429-TaKuD (9th Cir. B.A.P. Sep. 30, 2015).
- Summarized by David Hercher , U.S. Bankruptcy Court, District of Oregon
- 10 years 5 months ago
- Citation:
- In re Mainline Equipment, Inc., No. CC-14-1429-TaKuD (9th Cir. B.A.P. Sep. 30, 2015).
- Tag(s):
-
- Ruling:
- A California lien on personal property for unpaid property taxes is avoidable under Bankruptcy Code § 545(2).
- Procedural context:
- In an adversary proceeding, the chapter 11 debtor sought, under § 545(2), to avoid the tax lien of Los Angeles County for unpaid property taxes. The bankruptcy court ruled for the debtor. On appeal, the B.A.P. affirmed.
- Facts:
- The debtor failed to pay property taxes assessed by the county. The county recorded certificates of tax liens with the county recorder. Under Cal. Rev. & T. Code § 2191.4, the filings created liens on all personal property owned by the debtor in the county. Section 2191.4 states that the property tax lien on personal property is invalid against a purchaser for value or encumbrancer without actual knowledge of the lien when he or she acquires his or her interest in the property. The lien was thus invalid as to a third party who subsequently bought the debtor’s personal property in good faith for value. Section 545(2) of the Bankruptcy Code allows a trustee to set aside a lien that is not properly perfected as to a bona fide purchaser. Enactment of Cal. Code Civ. P. § 697.510 does not change that result.
- Judge(s):
- Laura S. Taylor, Frank L. Kurtz, and Randall L. Dunn, Bankruptcy Judges.
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