10th Circuit Bankruptcy Appellate Panel Confirms Chapter 7 Trustee Cannot Avoid Transfer of Bare Legal Title
Earlier this year the 10 Circuit Bankruptcy Appellate Panel confirmed that, under Kansas law, a chapter 7 trustee cannot avoid a transfer of bare legal title to real property under 11 U.S.C. § 548. The unpublished decision, dated May 9, 2014, was in the case of Davis v. Pham (In re Nguyen). The debtor had received an interest in real estate from his mother and her husband as a joint tenant along with his sister and mother’s husband. The debtor never lived at the property or received any of the income from the property, and the transfer to the debtor was done for estate planning purposes. Less than two years before filing a chapter 7 bankruptcy, the debtor quitclaimed his interest to his sister and mother’s husband, and the chapter 7 bankruptcy trustee challenged that transfer. The Bankruptcy Court ruled for the debtor that the quitclaim transfer could not be avoided by the trustee, because the debtor held only bare legal title to the real estate. On appeal, the 10th Circuit Bankruptcy Appellate Panel affirmed the Bankruptcy Court’s decision. The original decision can be read here.