Lovald v. Tennyson (In re Wolk)
- Citation:
- No. 11-6027, Appeal from the United States Bankruptcy Court for the District of South Dakota, July 5, 2011
- Tag(s):
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- Ruling:
- The BAP affirmed the decision of the bankruptcy court that the trustee had not met his burden under Section 363(b)(3) to show that the benefit to the estate from the sale of the debtor's residence, co-owned with a non-debtor who had contributed all of the equity in the property, outweighed the detriment to the co-owner.
- Procedural context:
- Appeal from the bankruptcy court's decision denying the trustee's motion to sell jointly owned real estate free and clear of the defendant co-owner's interest pursuant to Section 363(b) and (h).
- Facts:
- The debtor and his non-debtor spouse, who were dissolving their marriage at the time of the bankruptcy filing, held title as tenants in common to their single family residence. The debtor did not claim a homestead exemption in the house. The trustee sought an order authorizing him to sell the property arguing that partition was impracticable, a sale of only the estate's interest would realize less than a sale free of the co-owner's interest, and that the benefit to the estate would outweigh any detriment to the co-owner. All of the equity in the property was attributable to the co-owner's financial input. Nevertheless, the bankruptcy court assumed the trustee had a one-half interest in the equity pursuant to Section 544(a)(1). Thus, the maximum benefit to the estate would be approximately $31,535. The trustee failed, however, to meet his burden under Section 363(h) that the sale would be in the best interest of the estate. Specifically, the trustee failed to prove that such funds, if realized, would ultimately be available for distribution to unsecured creditors and there was substantial evidence of detrimient to the co-owner if the propert was sold given her significant health issues and the fact that she had contributed all of the equity in the property.
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