Violation Of the Bankruptcy Stay

Acts Taken in Violation of the Stay
If a party has received actual notice of the stay, violation of it is contempt, leading to fines, attorney’s fees and in some courts, damages, fin re Zartun (Bank. App. 9th Cir. 1983) 30 B.R. 543.] Under 362(h), an individual injured by a willful (knowing, but not necessarily malicious) violation of the stay can sue for damages, costs, and attorney’s fees. A violation which is initially innocent becomes willful if the violator proceeds or refuses to correct the situation after receiving notice of the filing of the petition.
The majority of the cases and the major commentators state that acts taken in violation of the automatic stay are void. [In re Posner (9th Cir. 1983) 700 F.2d 1243, cert, den. 464 U.S. 848.] The acts are void whether or not the violator had notice of the stay. Collier on Bankruptcy (15th Ed.) § 362.11 at 362-73.] However, in the Ninth Circuit the sale may only be “voidable” if the violation of the stay is a “technical” violation. in re Brooks (Bank. App. 9th Cir. 1987) 79 B.R. 479.] In Brooks, the defendant re-recorded a deed of trust to correct a mistake in the legal description without knowledge that one of the property owners had filed a petition under Chapter 7. When the other property owner attempted to void the lien in her later bankruptcy, the court held that the re-recording was only voidable at the discretion of the first debtor’s trustee and that the trustee had not opted to
IV-14

void the transaction.
This is critical in the foreclosure context because a void sale could be set aside even against a bona fide purchaser if made in violation of the stay. Section 549(c) creates an exception when a good faith purchaser without knowledge of the bankruptcy purchases the property for a fair equivalent value and the transfer has been perfected prior to the filing of notice of the bankruptcy petition in the county recorder’s office where the property is located.

Author: timothymccandless

The Impact—and Your Opportunity As Our Client left the hearing room, he knew this victory was bigger than just The Crossings. Other property owners facing similar issues could now challenge their assessments with greater confidence. The case set a precedent, demonstrating that robust, market-informed evidence could lead to fair property valuations. It had been a battle, but he had proved that the system could be challenged—and that fairness in taxation was worth fighting for. Could You Be Overpaying on Property Taxes? If you own Large apartment complexes or commercial property, you may be paying far more in property taxes than you should. Just like Our Client, you have the right to challenge an unfair assessment and secure the tax savings you deserve. At Lower Property Tax CA, we specialize in helping property owners like you reduce their tax burden. Our expert consultants and appraisal team will analyze your property’s financials, market conditions, and county assessment methodologies to build a strong case for a reduction.We recognize that every client's tax situation is unique. That's why we take the time to understand your specific needs and tailor our services accordingly. You can count on us to provide personalized attention to your tax matters. View all posts by timothymccandless