11 U.S.C. §362, 541; Automatic Stay; Property of the Estate
In re Geiger, 2006 Bankr. LEXIS 897, Case No. 05-54262 (Bankr. M.D. Ga. March 20, 2006) (Hershner)
The secured creditor held a foreclosure sale of the debtor’s real property approximately one hour prior to the filing of the debtors Chapter 13 petition. The creditor was the highest bidder, but there was no tender of consideration of the bid amount, no internal notation of the bid on the creditor’s records, and no execution of a deed of foreclosure. The creditor filed a motion to validate the sale, contending that the foreclosure sale was final upon its acceptance of the highest bid and, therefore, debtor had no interest in the property as of filing.
The court denied the motion. Federal law dictates whether an interest in property is property of the estate, while state law governs the nature and existence of the interest. Under Georgia law, the highest bidder obtains no interest in the foreclosed property merely by submitting the highest bid. Here, no deed was transferred and the creditor could point to no objective standard to show that a transfer occurred or that the debtor’s interest in the property was terminated prior to the filing of the petition.