[WSBARP] Thoughts on a nonprofit organization quitclaiming commercial property to its sole director who files a personal C13 bankruptcy to stop a commercial nonjudicial foreclosure?

[Josh Grant]

This looks like a termination of a nonprofit to benefit an individual rather than it being turned over to another nonprofit  Would the attorney general’s office be interested in this?

From: Rob Rowley 
Sent: Thursday, February 04, 2016 2:28 PM
To: WSBA RPPT 
Subject: [WSBARP] Thoughts on a nonprofit organization quitclaiming commercial property to its sole director who files a personal C13 bankruptcy to stop a commercial nonjudicial foreclosure?

I commenced a non-judicial foreclosure last year which was supposed to result in a trustee sale later this month.  Debtor is a Washington state nonprofit corporation (still in good standing/active) who held title to a commercial building.  Commercial note and deed of trust given by the nonprofit corporation with no personal guarantees.  Note goes into default and matures later this year.  I commence nonjudicial foreclosure.



Recently, nonprofit organization quitclaims the commercial building to its sole director (who signs the deed in his corporate capacity) in his personal capacity. Director then immediately files a personal chapter 13 bankruptcy to stop the foreclosure.  When I review the recorded deed I note the deed was recorded as a gift with no excise tax paid.  Deed on its face shows no consideration. There is little to no equity.



The chapter 13 plan proposes the property be sold to satisfy the personal debts of the debtor and that the debtor gets to keep his personal residence.  In other words, the proceeds above and beyond the debt owed to my client (the lender) would be used to satisfy the personal obligations of the director.



Other than the obvious lack of consideration, no excise tax paid (DOR issue) and abusive transfer of ownership of the property from a nonprofit to one of its directors – what other claims should I pursue?



Of course, a very aggressive claim and objection filed with the bankruptcy court and pointed out to the C13 trustee.



Thanks.



Robert R. Rowley | Attorney at Law

7 S. Howard St, Suite 218

Spokane, WA  99201

Telephone: (509) 252-5074

Mobile: (509) 994-1143

Facsimile: (509) 928-3084

Email: rob at rowleylegal.com

Web Site: www.rowleylegal.com



Practice concentrated on business, real estate and general legal matters in Washington and Idaho.







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