Richardson v. Citimortgage, Inc. (In re Emerson)

Summarized by Geoffrey Peters , Weltman, Weinberg & Reis Co., LPA
14 years 5 months ago

Citation:

2011 Bankr. LEXIS 3756

Tag(s):

Ruling:

State law determines the extent of a bankruptcy trustee's rights under 11 U.S.C. § 544(a)(3). Applying Michigan law, the existence of a recorded rescission of an erroneously executed discharge of a mortgage is sufficient to place a subsequent lienholder on inquiry notice of the properly perfected mortgage. The chapter 7 trustee had constructive notice of a mortgage that had been erroneously discharged and the discharge subsequently rescinded.

Procedural context:

This is an appeal to the Sixth Circuit Bankruptcy Appellate Panel from an order of the bankruptcy court granting summary judgment in favor of defendant mortgagee.

Facts:

Mortgagee erroneously executed a certificate of discharge of its mortgage. Upon realizing the mistake, mortgagee recorded a rescission of the document that discharged the mortgage. The rescission provided that the discharge was executed in error, that the mortgage had not been fully satisfied or paid, and the release of mortgage was withdrawn, cancelled, and declared of no force or effect. The Debtor filed a voluntary chapter 7 bankruptcy more than one year after the rescission was recorded. The Chapter 7 trustee filed an adversary proceeding to avoid mortgagee's interest pursuant to the strong-arm provision of 11 U.S.C. § 544(a)(3).

Judge(s):

Bankruptcy Appellate Panel of the Sixth Circuit, Judges Boswell, Rhodes, Shea-Stonum

ABI Membership is required to access the full summary. Please Sign In using your ABI Member credentials. Not a Member yet? Join ABI now - it is absolutely worth it!