In re Haar (Ch 7 Case No. 18-50476, Adv Case No. 19-05001)

Pursuant to 11 U.S.C. § 544(b)(1), Trustee sought to step into the shoes of the IRS and use Georgia’s fraudulent transfer law, O.C.G.A. § 18-2-74, to avoid the debtor’s ten-year old transfer of real property to her brother.  Some thirteen years prior to the debtor’s bankruptcy, the brother had conveyed the property to the debtor because the brother and his wife were having marital problems.  The brother retained all the benefits and burdens of ownership of the property.  The brother and his wife later reconciled and the debtor reconveyed the property to her brother.  Trustee argued the reconveyance was a fraudulent transfer because the debtor had an actual or constructive intent to defraud her creditors.  The court held that the debtor had held the property in constructive trust for her brother and that she had held bare legal title .  Property of the estate does not include property in which the debtor holds only legal title and not an equitable interest. 11 U.S.C. § 541(d).  The court held that the reconveyance was not a transfer of an interest of the debtor’s property under § 544.

Wednesday, September 29, 2021