Walters v. Cates

Case Type:
Case Status:
BAP No. CO-17-047 (10th Circuit, Aug 24,2018) Published
BAP for 10th Circuit affirmed ruling of bankruptcy court (D. Colo.) granting defendants' motion for summary judgment based on determination that transfer occurred outside of preference period. Transfer, for purposes of preference claim, occurred when lien created by deed of trust was perfected. Deed of trust recorded against debtor perfected deed of trust notwithstanding that debtor had transferred property to self-settled living trust in which she was sole trustee and beneficiary at time deed of trust was recorded. Perfection occurred regardless of whether debtor held interest in property.
Procedural context:
Bankruptcy court (D. Colo.) granted preference defendants' motion for summary judgment and plaintiff (chapter 7 trustee) appealed to BAP for 10th Circuit.
Approximately three years before filing her chapter 7 bankruptcy, debtor executed a $135k promissory note in favor of two family members. The debtor executed the note on August 1, 2012 and a deed of trust was also created on August 1, 2012 encumbering debtor's condo. The debtor executed the deed of trust on October 10, 2012. On January 24, 2013, debtor created a revocable one-party living family trust with herself as settlor, trustee, and sole beneficiary. Debtor quitclaimed her interest in the property to the trust on February 4, 2013. Creditors recorded the deed of trust on March 4, 2013. Eight days before the petition date, debtor caused the trust to execute and record a quitclaim deed back to the debtor.
Cornish, Jacobvitz, Hall

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