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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">Ex-con Debtor (embezzlement from two employers) and ex-husband (failing construction company) are overwhelmed by life, are both on title, and can’t agree on anything. That’s
why I’m concerned if a bankruptcy trustee gets involved. If we did a deed-in-lieu, we may have to answer questions regarding excess equity even though we could argue that we could have just foreclosed anyway (but who wants to have to make that argument).
I realize you didn’t have the extra facts but that is why I felt proceeding with a straight foreclosure would be the way to go because it would be cleaner. If Debtor filed for bankruptcy before we completed the foreclosure process, then we would petition
the court for relief from the stay based on being a secured party. That seemed to be a “known entity” to me (who does not practice bankruptcy law) rather than roll the dice and deal with a trustee who may try to set aside my deed-in-lieu as a preference.
AND, being a non-profit in the business of providing housing to needy families, non-profit, if it had it’s druthers, rather see the residence go to another needy family rather than see the residence listed on the open market.
<o:p></o:p></span></p>
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<p class="MsoNormal"><b>From:</b> wsbarp-bounces@lists.wsbarppt.com [mailto:wsbarp-bounces@lists.wsbarppt.com]
<b>On Behalf Of </b>Marcus Fry<br>
<b>Sent:</b> Friday, February 23, 2018 3:01 PM<br>
<b>To:</b> WSBA Real Property Listserv <wsbarp@lists.wsbarppt.com><br>
<b>Subject:</b> Re: [WSBARP] Bankruptcy Gurus<o:p></o:p></p>
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<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="color:#1F497D">That much equity? Given those facts, while the foreclosure is pending, why don’t you encourage Debtor to list it and connect Debtor to a realtor who will aggressively market it and sell it?<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<div>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D">Marcus J. Fry<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-bottom:12.0pt"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D">Lyon, Weigand & Gustafson, P.S.
<o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D">Confidentiality:
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma",sans-serif">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma",sans-serif">
<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>Paul Neumiller<br>
<b>Sent:</b> Friday, February 23, 2018 2:41 PM<br>
<b>To:</b> WSBA Real Property Listserv<br>
<b>Subject:</b> Re: [WSBARP] Bankruptcy Gurus<o:p></o:p></span></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">Ahhhh, now we are wading into the tall weeds. These are all good points but there are additional facts. Debtor has been incarcerated for the past two years and Debtor’s
ex-boyfriend is living in the house and is cooperative. Non-profit has been inside and it’s in OK shape. Debtor doesn’t want to pack and vacate for at least 45 days anyway so the non-profit would get only about 45 to 60 days early possession (we have already
served the Notice of Default and it’s time to serve the Notice of Trustee Sale and Notice of Foreclosure). With this debt, delinquent HOA fees, all of the junior lienholders, delinquent taxes for two years, etc., Debtor is a bit overwhelmed BUT there probably
is some equity, say $50k to $75k.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif"><o:p> </o:p></span></p>
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<p class="MsoNormal"><o:p> </o:p></p>
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<p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Times New Roman",serif"> <o:p></o:p></span></p>
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbarp-bounces@lists.wsbarppt.com">
wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>Marcus Fry<br>
<b>Sent:</b> Friday, February 23, 2018 2:00 PM<br>
<b>To:</b> WSBA Real Property Listserv <<a href="mailto:wsbarp@lists.wsbarppt.com">wsbarp@lists.wsbarppt.com</a>><br>
<b>Subject:</b> Re: [WSBARP] Bankruptcy Gurus<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal"><a name="_GoBack"></a><span style="color:#1F497D">Paul:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D">I respectfully disagree. I would take the deed-in-lieu. Possession is paramount in many of these cases to protect the security. You should always be glad to get the debtor out of the property because if they
no longer see the home as investment, they are not going to care to keep it up. If debtor later files for bankruptcy and someone tries to set it aside, then just deal with it then. I should note that I doubt the trustee or anyone else for that matter will
seek to set aside the transfer if there isn’t any equity in the property.<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
<div>
<p class="MsoNormal" style="text-align:justify"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D">Marcus J. Fry<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D">Lyon, Weigand & Gustafson, P.S.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D">P.O. Box 1689
<br>
Yakima, Washington 98907 <br>
Telephone: (509) 248-7220 <br>
Facsimile: (509) 575-1883 <o:p></o:p></span></p>
<p class="MsoNormal" style="text-align:justify"><b><u><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D"><o:p><span style="text-decoration:none"> </span></o:p></span></u></b></p>
<p class="MsoNormal" style="text-align:justify"><b><u><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D">NOTICES:<o:p></o:p></span></u></b></p>
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<p class="MsoNormal" style="text-align:justify"><b><span style="font-size:10.0pt;font-family:"Arial",sans-serif;color:#1F497D">Confidentiality:
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are hereby notified that any disclosure, or taking of any action in reliance on the contents, is strictly prohibited. If you have received this transmission in error, please contact us immediately and return the e-mail to us by choosing Reply (or the corresponding
function on your e-mail system) and then deleting the e-mail.<o:p></o:p></span></p>
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<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma",sans-serif">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma",sans-serif">
<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b><a href="mailto:nestor@pplsweb.com">nestor@pplsweb.com</a><br>
<b>Sent:</b> Friday, February 23, 2018 1:39 PM<br>
<b>To:</b> 'WSBA Real Property Listserv'<br>
<b>Subject:</b> Re: [WSBARP] Bankruptcy Gurus<o:p></o:p></span></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">I agree with you. I never heard of a completed foreclosure being set aside a preference since it is involuntary transfer. I would continue with the foreclosure and forget the deed-in-lieu since you need to take out the subordinate lien
holders anyways. Even though you are a secured creditor with a priority interest, I would avoid getting dragged into Bankruptcy court on this issue. If they file bankruptcy at this point in time you are still getting dragged in, but it should be less complicated
to get a relief from stay and proceed with foreclosure.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">My two cents worth for a Friday.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<div>
<p class="MsoNormal"><span style="color:black">Nestor Gorfinkel, Attorney at Law<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:black">Licensed in Washington & Florida<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:black">Florida Civil-Law (International) Notary<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:black"><o:p> </o:p></span></p>
<p class="MsoNormal"><b><span style="font-size:10.0pt;color:black">ATTENTION - This e-mail message and any attachment to this e-mail message may contain confidential information that is legally privileged. If you are not the intended recipient, you must not
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<p class="MsoNormal"><b>From:</b> <a href="mailto:wsbarp-bounces@lists.wsbarppt.com">
wsbarp-bounces@lists.wsbarppt.com</a> [<a href="mailto:wsbarp-bounces@lists.wsbarppt.com">mailto:wsbarp-bounces@lists.wsbarppt.com</a>]
<b>On Behalf Of </b>Paul Neumiller<br>
<b>Sent:</b> Friday, February 23, 2018 1:10 PM<br>
<b>To:</b> <a href="mailto:wsbarp@lists.wsbarppt.com">wsbarp@lists.wsbarppt.com</a><br>
<b>Subject:</b> [WSBARP] Bankruptcy Gurus<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoPlainText">Hey Everybody And Happy Friday. Please bear with me on this set of facts. I am working with a non-profit that sells housing to low-income people with seller financing. Buyer/Debtor is now in default and there are multiple junior liens
to the non-profit's deed of trust amounting to about $100k. Debtor, who is represented by a legal aid society type attorney, is willing to sign a deed-in-lieu agreement giving the residence back to the non-profit so the non-profit can fix it up and get another
deserving family into the residence. (My deed-in-lieu contains non-merger language so that Creditor can continue with the foreclosure process to foreclose out the junior lienholders.) Here's the problem, Debtor's attorney tells me that Debtor wants to declare
bankruptcy once the "foreclosure procedure is completed." <o:p></o:p></p>
<p class="MsoPlainText"><o:p> </o:p></p>
<p class="MsoPlainText">OK, it seems to me that the non-profit should NOT accept the deed-in-lieu now because it could be set aside as a preferential payment or transaction in the bankruptcy court. The only reason that the non-profit would accept the deed-in-lieu
is to get early possession of the residence so the non-profit can start to repair it and fix it up. It seems to me that, since the non-profit needs go the full foreclosure route
<i>anyway</i> in order to eliminate the junior lienholders, then the non-profit should not accept the deed-in-lieu and avoid the specter of being set aside as a preference. The non-profit wouldn’t get the property early but it may be a "cleaner" transaction.
Is this sound reasoning?? Can a fully completed foreclosure get set aside as a preference? Thanks for your help and drive carefully out there.<o:p></o:p></p>
<p class="MsoPlainText"><o:p> </o:p></p>
<p class="MsoPlainText">-Paul Neumiller <o:p></o:p></p>
<p class="MsoPlainText"><o:p> </o:p></p>
<p class="MsoPlainText"><o:p> </o:p></p>
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