for is a hypothetical (having § 544(a)(3) real property, trustee BFP4V hypothetically recorded at moment of bankruptcy)… thus, if C holds that is TD NOT properly recorded, then MAY invalidate trustee TD AND are both necessary b/c of differences b/w § 544(a)(1) § 544(a)(3) UCC and does NOT refer to Art. IX state recording statutes UCC § 9317 BFP4Vs… AND, (generally) do NOT refer to state recording statutes JLCs Assume O conveys property to A, which is NOT recorded… then, B obtains a against O… judicial lien B could NOT attack O’s unrecorded prior conveyance to A (b/c B is a … NOT a JLC, BFP4V) Mistakes in if serious enough, MAY render unrecorded depends on TD, TD state (CA is liberal/lenient)… Bad legal descriptions Errors in D’s name Errors in street addresses Misindexing Improper/missing notarization/acknowledgment Again, will search for such glitches… trustee thus, C-lender should conduct pre-enforcement check of … documentation if mistake found, then must re-document 90 days before bankruptcy… AND, may ONLY re-document w/ (i.e. 6-week forbearance) Purpose of do away w/ secret, unrecorded interests in D’s property § 544(a) If NO then D could simply deed away all property pre-bankruptcy in § 544(a), unrecorded transactions… BUT, arguably overkill NO on power (MAY trustee’s avoid … unrecorded interests regardless of injury caused by failure to record) Failure to record creates false appearance of D’s ownership/wealth… BUT, NOT all Cs check records before extending credit… however, from major Cs (who check records AND are reliance” … “ripple directly misled) MAY influence minor Cs (who do NOT check records, BUT are indirectly misled by major Cs’ reliance) vs. (for § 544(a)(3))… “Knowledge” “Notice” In woman owns condo in D’s building, but does NOT McCannon v. Marston, record (NO after D files for bankruptcy, goes after actual notice)… trustee woman’s unrecorded conveyance…
§ 544(a)(3) for real property, trustee is a hypothetical BFP4V (having hypothetically recorded at moment of bankruptcy)… thus, if C holds TD that is NOT properly recorded, then trustee MAY invalidate TD § 544(a)(1) AND § 544(a)(3) are both necessary b/c of differences b/w UCC Art. IX and state recording statutes UCC § 9317 does NOT refer to BFP4Vs… AND, state recording statutes (generally) do NOT refer to JLCs Assume O conveys property to A, which is NOT recorded… then, B obtains a judicial lien against O… … B could NOT attack O’s unrecorded prior conveyance to A (b/c B is a JLC, NOT a BFP4V) Mistakes in TD, if serious enough, MAY render TD unrecorded depends on state (CA is liberal/lenient)… Bad legal descriptions Errors in D’s name Errors in street addresses Misindexing Improper/missing notarization/acknowledgment Again, trustee will search for such glitches… … thus, C-lender should conduct pre-enforcement check of documentation if mistake found, then must re-document 90 days before bankruptcy… AND, may ONLY re-document w/ (i.e. 6-week forbearance) Purpose of § 544(a) do away w/ secret, unrecorded interests in D’s property If NO § 544(a), then D could simply deed away all property pre-bankruptcy in unrecorded transactions… … BUT, arguably overkill NO on trustee’s power (MAY avoid unrecorded interests regardless of injury caused by failure to record) Failure to record creates false appearance of D’s ownership/wealth… BUT, NOT all Cs check records before extending credit… … however, “ripple reliance” from major Cs (who check records AND are directly misled) MAY influence minor Cs (who do NOT check records, BUT are indirectly misled by major Cs’ reliance) “Knowledge” vs. “Notice” (for § 544(a)(3))… In McCannon v. Marston, woman owns condo in D’s building, but does NOT record (NO actual notice)… after D files for bankruptcy, trustee goes after woman’s unrecorded conveyance…
Bankruptcy_Schechter-Fall-2009.docx