Investor · Centreville, VA · Member since 2016 · 109 posts · 65 votes
I’m headed to BK court next week to petition the court to lift the automatic stay, thereby permitting me to resume/conclude foreclosure on a tax lien certificate in Maryland.
The property is an investment for the owner, not a principal residence.It is a commercial brick shell & lot that is not presently producing income. The property is in disrepair and continues to deteriorate with weathered & rotting wood, broken windows and is in need of lots of rehab. I don’t know if it is insured, but doubt it.
The owner has filed CH13 bankruptcy and an unrealistic plan. I’m looking for rationale for lifting the stay that others have used.
I have hired a BK attorney but want to do some independant research.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
9y
I think you have a tough battle ahead. The reason a mortgage company can get a lift stay is that they have a collateral interest in the property and it is public record. I don't think we have ever gotten a lift stay on a BK for a tax foreclosure in MD.
I think your best bet is to show the condition of the property and that it is deteriorating and that the property will ultimately have no value to other creditors. However if you are allowed to take the property, it will get back into productive use.
Did you bid more than the lien amount? If you did, I would point out that it was already sold at auction, It got exposure and was sold at market value for a distressed property. The owner and the BK court would be entitled to any surplus over the tax amount. Again the best option for the creditors.
I would be anxious to know how this turns out for you. We are actually filing for our first lift stay in a tax sale foreclosure tomorrow. The owner of the property filed bankruptcy after our foreclosure judgment.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
9y
I think you have a tough battle ahead. The reason a mortgage company can get a lift stay is that they have a collateral interest in the property and it is public record. I don't think we have ever gotten a lift stay on a BK for a tax foreclosure in MD.
I think your best bet is to show the condition of the property and that it is deteriorating and that the property will ultimately have no value to other creditors. However if you are allowed to take the property, it will get back into productive use.
Did you bid more than the lien amount? If you did, I would point out that it was already sold at auction, It got exposure and was sold at market value for a distressed property. The owner and the BK court would be entitled to any surplus over the tax amount. Again the best option for the creditors.
I would be anxious to know how this turns out for you. We are actually filing for our first lift stay in a tax sale foreclosure tomorrow. The owner of the property filed bankruptcy after our foreclosure judgment.
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
9y
In SC bankruptcy doesn't protect you from not paying your taxes.
My County knew the house was in bankruptcy and they issued me the tax deed anyway. The bankruptcy lawyer tried to intervein but I got the deed in the mail anyway.
Investor · Centreville, VA · Member since 2016 · 109 posts · 65 votes
9y
John - did the foreclosure process conclude prior to BK filing and only the transfer of deed remained, or did the BK filing precede foreclosure conclusion? If BK filing preceded foreclosure conclusion, I thought BK would preempt further foreclosure action, unless BK court allowed foreclosure to continue. If foreclosure finished first, I can see how the deed passing was just an administrative event.
Do you mind elaborating on how your process unfolded, filings, chronology and such?
Investor · Centreville, VA · Member since 2016 · 109 posts · 65 votes
9y
Ned, I paid taxes only at OTC. Current research leads me to think that the right angle is inadequate protection of the collateral by the owner (no insurance, continued decline, no evidence of effort to preserve or improve the collateral).
Tax lien cert gives me secured standing, but I was hoping that the tax position might afford me some other priorities to separate me out from other creditors, none of which have specific interest in the tax lien property. There's one other secured creditor on the primary residence and a host of other non-secured creditors.
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
9y
@Keith Thompson even though you bought it "Over the counter" it still went to auction. No one bid on it at that auction so the marketplace felt is was not worth the taxes considering the risk. You were essentially the top bidder. AND the extended time on market to simply get a bid the amount of the taxes only provides stronger evidence of it's very narrow potential to achieve any value for the creditors.
Investor · Centreville, VA · Member since 2016 · 109 posts · 65 votes
9y
I agree Ned. Interesting cases over time. Little from MD directly, but across the spectrum, everything from:
>Not part of the BK action, to
>Lift the stay and let me move on, to
>Get in line with the others.
There's a US Supreme Court decision that supports lifting the stay. Won't know for a while though as the case has been continued for about a month out. This is one of the more interesting legal wrinkles I've come across in my years of investing, perhaps common to many, but new to me. I'm looking forward to seeing how it plays out. I had an real interesting Escheat situation quite some time ago when VA started that program up again to put nonpaying RE parcels back into the plus column.