Thomas, III v. Helbling

Summarized by J. Debbeler , Bricker Graydon LLP
11 years 9 months ago

Citation:

2014 FED App. 0003P(6th Cir.)

Tag(s):

Ruling:

Bankruptcy Appellate Panel of the Sixth Circuit affirmed the decision of the Bankruptcy Court for the Northern District of Ohio which held that real property transferred in error by the Debtor to his father was impressed with a constructive trust as a matter of law and consequently the bankruptcy estate had no interest in the real property.

Procedural context:

Adversary proceeding by Chapter 7 Trustee to determine liens and interests in real property and sell the real property. A trial was held on stipulated facts.

Facts:

Debtor's father bought a residence in 2001. Debtor's father wanted his residence to become the property of his children at his death and he executed a Transfer on Death Deed to Debtor and Debtor's sister in 2003. Due to an error in the deed the residence was in fact transferred to the children. Debtor's father then mortgaged the residence to PNC Bank. In 2004 the error was found but the documents executed to ostensibly correct the error were faulty and did not fix the problem. A title company had participated in and prepared the erroneous deeds. The Bankruptcy Court found that a constructive trust existed since 2003 due to the intentions of the parties and that such a constructive trust was valid under Ohio law. The Bankruptcy Court distinguished the Omegas Group case decided by the Sixth Circuit Court of Appeals.

Judge(s):

BAP- Harriosn, Emerson & LLoyd Bankruptcy Court: Jessica Price Smith

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