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1 Asset In The Way!

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  • 1 Asset In The Way!

    Hi Forum, Virgin poster here....

    My wife is filing for Chapter 7 BK in a few months, all debt is hers and we wanted one person left with good credit, blah, blah...

    She inherited a singular piece of property in 2007 from the relative that gifted her
    the land to build our home in 2001. The plot is exactly 1 acre, unimproved,
    no dwelling and sits directly in front of our home, so is between us and the street. It also sits between us and mother-in-law, so is bordered on three sides by "the folks".
    I know it will be an asset and disclosed from the beginning, and that it will be put up for
    sale.

    The problem is we have no idea of what it's worth, and apparently, no one in our area does either. The area we live in is not "comparable" to the home we built (our bad) and it's so developed, there is no other plot of land even close to this size or within even broad definitions of our "area". So there are no comps, tax office hasn't assessed it since the dwelling has been demolished (2 yrs), and if we CAN get them out to reassess, they will only cut the value by small increments despite the drastic drop in value here (south metro ATL) The value of our home + 2acres has dropped 50% at this point.
    FYI tax assessor's ofc currently has this plot valued at 25k
    hahahahahahaha <----hysterical laughter.

    How will the trustee get a FMV for this property and what happens if it never sells?
    Will we be held up in BK for YEARS?!?

  • #2
    The Trustee will have his/her realtor look at the property. If the realtor does not think it can be marketed in the normal way, the Trustee may just list the property for public sale (in my district such sales are held at the bk court 1x/month) to see if there is any interest. If the property simply cannot be sold or the Trustee sees no benefit in trying to sell it, the Trustee will abandon it. If abandoned ownership is returned to you.

    You or a family member can make an offer to purchase the property but the offer may end up as the "opening bid" in a public sale.

    Des.

    Comment


    • #3
      Thanks for your response Des....I've been doing alot of reading here for the past couple of days and noticed a few posters that had their time lines listed as 2 years of more,
      What a nightmare scenario! If anyone here has had a similar experience, I'd love to hear about it.

      Comment


      • #4
        Originally posted by bmjlaw View Post
        I've been doing alot of reading here for the past couple of days and noticed a few posters that had their time lines listed as 2 years of more
        Practice pointer:

        If the Trustee is just sitting on property for say a year waiting to see if the market improves, that is a lot of garbage. File a Motion to Abandon and make the Trustee object and then explain why he is holding up the closing of the case. Clearly if the property has not been marketed and sold within 1 year it is of inconsequential value and is burdensome to the estate. You may not win the argument but at least the Judge will know what is going on and may impose a deadline for the Trustee to sell and, if not sold, the property will be deemed abandoned.

        Des.

        Comment


        • #5
          While I'm not in Georgia, I own a lot just shy of 8,000 sq ft directly next door to me. It's unimproved, and I used the Tax Assessed Value for it that was about 15K.and it was a concern that the Trustee would want it. While sitting and waiting to go before the Trustee at my 341, my attorney said to me, "Well, we'll see what he says about the lot." I said, "Will it help to know that there's a fence around it and that I have found old trash buried in my yard and that the ex-owner dumped gasoline in some spots of it to kill tree roots?" (Back in the day where I live, residents didn't have trash removal so they buried their trash in the backyard. I have found some very interesting things!") My attorney said, "We'll see." Of course, after the regular questions, the Trustee says, "Now, about this lot, tell me about it." I said, "I don't know what to tell you other than it's a piece of ground next to my house that I call my yard." My attorney said, "Mr. Trustee, the land was used as a landfill and an environmental survey will have to be done as toxins were used to kill trees on the property." The Trustee gave me a tired look and said, "Is there open access to the property?" I said, "No sir, there's a fence wrapped completely around it that's attached to my house." He said, "Ok, I don't want it, then." So, I got to keep the lot and I'm still a no asset case. That's my experience, hope it helps.
          Chapter 7 filed 10/8/10...341 Meeting 12/6/10....Discharged 2/16/2011....Case Closed! 3/1/2011

          Comment


          • #6
            Originally posted by bmjlaw View Post
            Hi Forum, Virgin poster here....

            My wife is filing for Chapter 7 BK in a few months, all debt is hers and we wanted one person left with good credit, blah, blah...

            She inherited a singular piece of property in 2007 from the relative that gifted her
            the land to build our home in 2001. The plot is exactly 1 acre, unimproved,
            no dwelling and sits directly in front of our home, so is between us and the street. It also sits between us and mother-in-law, so is bordered on three sides by "the folks".
            I know it will be an asset and disclosed from the beginning, and that it will be put up for
            sale.

            The problem is we have no idea of what it's worth, and apparently, no one in our area does either. The area we live in is not "comparable" to the home we built (our bad) and it's so developed, there is no other plot of land even close to this size or within even broad definitions of our "area". So there are no comps, tax office hasn't assessed it since the dwelling has been demolished (2 yrs), and if we CAN get them out to reassess, they will only cut the value by small increments despite the drastic drop in value here (south metro ATL) The value of our home + 2acres has dropped 50% at this point.
            FYI tax assessor's ofc currently has this plot valued at 25k
            hahahahahahaha <----hysterical laughter.

            How will the trustee get a FMV for this property and what happens if it never sells?
            Will we be held up in BK for YEARS?!?
            You need to go file a deed restriction giving the owner of your house an easement right through the middle of the lot. Or put in place other restrictions that make it undesirable to sell.

            Its still your property, I think you can do what you wish with it. You definitely need legal advice though, probably both a bankruptcy attorney and a real estate attorney to make sure everything is on the up and up.

            Don't restrict it so that you can't do what you want, but an easement through it makes sense, especially since it is between your property and the street. Maybe even a restriction that all contruction on the lot must be approved by the owner of your lot. I know some of this may be stretching it, but get legal advice, there are options with it being so close to your property and between you and the street.

            As a matter of fact if you must cross it to get to the street, you definitely NEED an easement, so make it disadvantageous for the trustee to sell. Don't end up landlocked.

            Comment


            • #7
              Originally posted by chrisdfw View Post
              You need to go file a deed restriction giving the owner of your house an easement right through the middle of the lot. Or put in place other restrictions that make it undesirable to sell. Its still your property, I think you can do what you wish with it. You definitely need legal advice. . .
              bmjlaw,

              With all due respect to chrisdfw, this statement (but for the part about getting legal advice) is wrong. The property is not part of your residence - which I presume is exempt. It is a separate piece of land (even if directly in front of your residence) and apparently no exemption applies.

              On the day you filed, this land became the property of the bk estate. It is not your land anymore and I think you understand that. You cannot exercises dominion and control over the land and cannot place any restrictions on it. If you do you will most likely lose your right to a discharge due to bk fraud.

              If and when the Trustee abandons the asset it reverts back to you and, at that point, you can do as you please. If the asset is not abandoned and you are the successful purchaser of the asset from the bk estate, once again, you can do with it as you please. Until ownership of the asset is vested back to you DO NOTHING.

              Des.

              Comment


              • #8
                Des- just a quick point-I don't think OP has already filed. Does that make any difference as to the options he has?

                Comment


                • #9
                  Originally posted by daylate View Post
                  Des- just a quick point-I don't think OP has already filed. Does that make any difference as to the options he has?
                  Dumb me and I owe an apology to bmjlaw. My apologies.

                  Now, you pose a very interesting question. If one follows all of the requirements under State law to create a valid restriction (admittedly in an effort to devalue the asset) and then, almost immediately files a bk, can a Trustee set the restrictions aside? I do not know.

                  Creating the restriction does not appear to be a "fraudulent conveyance" nor is it a "preference". I do not see any avoiding power under the Code that would allow a trustee to exercise his/her strong-arm powers but that does not mean there isn’t one. I just don’t see one.

                  However, if I was the Trustee (and assuming no avoiding powers apply) I would argue that the bk filing was done in bad faith and should be dismissed under 727(a)(1) and/or (a)(5) as the debtor would have deliberately "destroyed" property within 1 year prior to filing [(a)(1)] or failed to explain the loss of an asset or the deficiency of an asset [(a)(5)].

                  In other words, still not a good idea.

                  Des.

                  Comment


                  • #10
                    I would definitely get a lawyer, don't destroy the property of course, just do whatever it takes to protect the value of your property.
                    That is exactly how I would ask a real estate attorney about it. I am concerned if I lose X property, someone may block access or otherwise devalue MY homestead.
                    Do you have to cross it to get to your property? If you do you NEED to file for an easement yesterday, regardless of bankruptcy. Also, if you ever decide to sell it, you don't want someone using it as a dump, building something that dropsthe value of your property, etc.
                    You need to clear it with a good bankruptcy attorney, but I think protecting your property value with an easement and deed restrictions is a reasonable thing to do. I am not an attorney, but I am well versed in business and real estate law. My parents bought a property, adjacent to one that a homeowner had, and there were deed restrictions, they cannot have junk vehicles, must build a home of certain size, cannot have a barn visible form the street, etc etc etc.

                    I would definitely stay away from deliberately destroying the property, but do whatever it is in your best interests to protect yourself. If you would rather have your driveway run right through the other property that is just a choice for your own convienience

                    Talk to attorneys, real estate and bankruptcy, they may well know how far you can take things, it is probably different from area to area.

                    Comment

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