Tag: tenants by the entireties

Bankr. E.D.N.C.: In re Grimes – Motion to Avoid Fixing of Judgment Liens in the Future Denied

Summary:

Grimes owns real property with her husband as tenants by the entireties. After filing bankruptcy, she sought to avoid the fixing of three judgments at any later point against that property should it later cease to be held as tenants by the entireties, for example due to divorce or her husband’s death.
The bankruptcy court, dissenting from In re Corey, 2013 WL 3788239 (Bankr. E.D.N.C. 2013), held that 11 U.S.C. § 522(f) did not allow the avoidance of a hypothetical future “fixing of a lien.” That notwithstanding, Grimes’ discharge protected her from such hypothetical future liens as “[without a debt, no lien can be created.”

Commentary:

In fact, an attempt to fix such a lien with no underlying obligation in the future would constitute a discharge violation.… Read More

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Bankr. E.D.N.C.: In re Adams- Rents from Tenant by the Entireties Properties

Summary:

In an involuntary Chapter 7 case filed against a land developer, the Trustee sought turnover of rents generated by real property owned with the Debtor’s spouse as tenants by the entireties.

The Debtor argued that, while earlier case law held that it was “settled that accruing rents and profits are attributable entirely to the husband and subject to the claims of his creditors”, Stubbs v. Hardee, 461 F.2d 480, 482 (4th Cir., 1972), in 1982 North Carolina statutorily changed the rights between husbands and wives regarding control of rents from properties held as tenants by the entireties. N.C.G.S. § 39-13.6 now provides that spouses would have “an equal right to the control, use, possession, rents, income and profits” of tenant by the entireties property.… Read More

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4th Circuit: Ballard v. Bank of America- Equal Credit Opportunity Act

Summary:

Kellie Ballard co-signed a loan agreement for her husband, Michael Ballard, for a loan (and three subsequent restructuring) from Bank of America (“BoA”) for his business, FoodSwing, even though she has neither an ownership or operating interest in the business. The couple owns, among other assets, a home in Maryland (presumably as Tenants by the Entireties) and a winery in California. In November 2012, Ms. Ballard brought suit against BoA, seeking equitable and injunctive relief under federal and state Equal Credit Opportunity Acts (“ECOA”), alleging that BoA improperly required her to serve as a guarantor.

ECOA makes it unlawful for “any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction on the basis of .… Read More

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Bankr. E.D.N.C.: Alexander- Avoidance of Judgment Lien against Debtor and Non-Debtor Spouse in Tenants by the Entireties Property

Summary:

Medical Creditor obtained a judgment against the Debtor and Non-Filing Spouse, with such lien attaching to the property that the Debtor and the Non-filing Spouse own as Tenants by the Entireties. After filing Chapter 7, the Debtor sought to avoid, pursuant to 11 U.S.C. § 522(f), the judgment lien.

The Bankruptcy Court first restated that property owned as Tenants by the Entireties “is a form of ownership where the husband and wife are each ‘deemed to be seized of the entire estate, with neither spouse having a separate or undivided interest therein.’” Accordingly, pursuant to 11 U.S.C. § 541(a), the Debtor’s interest in the property, i.e.… Read More

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N.C. Court of Appeals: Countrywide v. Reed- Deed of Trust signed by only one Joint Tenant Effective only Against that Joint Tenant’s Interest. Termination of Right of Survivorship

Summary:

Real property was titled as “Margaret D.  Smith and D.  Reed and wife, Judy C.  Reed Joint Tenants with rights of survivorship.”  Only Ms.  Reed signed the Deed of Trust and mortgage note with Countrywide.  After Ms.  Smith died and the mortgage was in default, Countrywide sought reformation of the Deed of Trust.

The Court of Appeal held that originally Ms.  Smith owned a one-half interest in the property with the Reeds as Joint Tenants with the rights of survivorship.  The Reeds owned their one-half interest as tenants by the entireties.

Pursuant to N.C.G.S. § 41-2(a) (2011) “[u]pon conveyance to a third party by less than all of three or more joint tenants holding property in joint tenancy with right of survivorship, a tenancy in common is created among the third party and the remaining joint tenants, who remain joint tenants with right of survivorship as between themselves.”  Because North Carolina is a “title theory state”, a “mortgagee does not receive a mere lien on the mortgage real property, but receives legal title to the land for security purposes.”  Neil Realty Co. Read More

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Bankr. MDNC: In re Stout- Transfer of Property to Tenancy by Entireties with Intent to Hinder, Delay or Defraud Creditors

The Debtor acquired a piece of real property in 2001 solely in his name.  In 2007, three months after the Plaintiff/Creditor file a lawsuit against the Debtor, the Debtor transferred the property to himself and his wife as Tenants by the Entireties.  Four months later, the Debtor filed Chapter 7.

The Plaintiff brought an action against the Debtor under 11 U.S.C. § 727(a)(2) to deny his discharge on the basis that the transfer of property had been  done to hinder, delay or defraud creditors, specifically to thwart collection on any judgment resulting from his State Court Action.

The Court began by recognizing that a transfer by itself is insufficient to show an intent to hinder, delay or defraud creditors, and then turned to the various “badges of fraud”, including:

1. … Read More

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