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In re Earsline Giddens

02 B 41591

Tax sale purchaser obtained a tax deed for property owned by the debtor and transferred the tax deed to a land trust for the benefit of a third party. The debtor’s interest was not recorded. The third party used this interest to secure a loan with a finance company. The finance company moved under 11 U.S.C. § 362(d) to annul the automatic stay in the debtor’s chapter 13 case for “cause” in order to validate the tax deed that was issued while the stay was in effect. The court held that: (1) as the holder of both the legal and equitable title to the real estate, the debtor had a property interest that became part of her bankruptcy estate in spite of the fact that her legal interest had not been recorded until 2 years after the pendency of a prior chapter 13 case; (2) the filing of the application for an order issuing the tax deed by the tax sale purchaser and the issuance of the tax deed were willful violations of the automatic stay because the tax purchaser knew of the debtor’s unrecorded interest due to her efforts to negotiate with the tax purchaser; and (3) that equity did not clearly favor annulment of the automatic stay.

Tuesday, June 10, 2003