Tax Lien Foreclosure & Lifting the Bankruptcy Automatic Stay

[Keith Thompson]

I’m headed to BK court next week to petition the court to lift the automatic stay, thereby permitting me to resume/conclude foreclosure on a tax lien certificate in Maryland.

The property is an investment for the owner, not a principal residence.It is a commercial brick shell & lot that is not presently producing income. The property is in disrepair and continues to deteriorate with weathered & rotting wood, broken windows and is in need of lots of rehab. I don’t know if it is insured, but doubt it.

The owner has filed CH13 bankruptcy and an unrealistic plan. I’m looking for rationale for lifting the stay that others have used.

I have hired a BK attorney but want to do some independant research.

Case citations or thoughts?

[Ned Carey]

I think you have a tough battle ahead. The reason a mortgage company can get a lift stay is that they have a collateral interest in the property and it is public record. I don't think we have ever gotten a lift stay on a BK for a tax foreclosure in MD. 

I think your best bet is to show the condition of the property and that it is deteriorating and that the property will ultimately have no value to other creditors. However if you are allowed to take the property, it will get back into productive use.

Did you bid more than the lien amount? If you did, I would point out that it was already sold at auction, It got exposure and was sold at market value for a distressed property. The owner and the BK court would be entitled to any surplus over the tax amount. Again the best option for the creditors. 

I would be anxious to know how this turns out for you. We are actually filing for our first lift stay in a tax sale foreclosure tomorrow. The owner of the property filed bankruptcy after our foreclosure judgment.