Pettie v. Brannon (In re Brannon)

584 B.R. 417
CourtUnited States Bankruptcy Court, N.D. Georgia
DecidedApril 5, 2018
DocketCASE NO. 16–54770–WLH; ADVERSARY PROCEEDING NO. 16–5212–WLH
StatusPublished
Cited by3 cases

This text of 584 B.R. 417 (Pettie v. Brannon (In re Brannon)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, N.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pettie v. Brannon (In re Brannon), 584 B.R. 417 (Ga. 2018).

Opinion

III. APPLICABLE LAW

a. Count II: Avoidance of Transfer Pursuant to 11 U.S.C. § 544(a)(3)

Plaintiff alleges the Transfer is avoidable pursuant to section 544(a)(3) of the Bankruptcy Code.1

Section 544(a) of the Bankruptcy Code allows a trustee to avoid any transfer of property of the debtor that is voidable by a hypothetical creditor that extends credit to the debtor as of the petition date and obtains either a judicial lien or an execution against the debtor. The section provides:

The trustee shall have, as of the commencement of the case, and without regard to any knowledge of the trustee or of any creditor, the rights and powers of, or may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by-
(3) a bona fide purchaser of real property, other than fixtures, from the debtor, against whom applicable law permits such transfers to be perfected, that obtains the status of a bona fide purchaser and has perfected such transfer at the time of the commencement of the case, whether or not such a purchaser exists.

11 U.S.C. § 544(a)(3). The trustee need not identify a specific creditor with a cause of action in order to recover under section 544(a).

Since Plaintiff holds the rights of a bona fide purchaser as of the Petition Date, the Court must determine the rights of a bona fide purchaser under Georgia law. Georgia law provides, "A deed may be recorded at *421any time; but a prior unrecorded deed loses its priority over a subsequent recorded deed from the same vendor when the purchaser takes such deed without notice of the existence of the prior deed." O.C.G.A. § 44-2-1. Further, "every unrecorded voluntary deed or conveyance of land made by any person shall be void as against subsequent bona fide purchasers for value without notice of such voluntary deed or conveyance." O.C.GA. § 44-2-3.

Under Georgia law, "a bona fide purchaser for value is protected against outstanding interests in land of which the purchaser has no notice." Montgomery v. Barrow, 286 Ga. 896, 692 S.E.2d 351, 352 (2010) (citing Farris v. Nationsbanc Mtg. Corp., 268 Ga. 769, 493 S.E.2d 143, 145 (1997) ). As to notice, "any circumstance which would place a man of ordinary prudence fully upon his guard, and induce serious inquiry, is sufficient to constitute notice of a prior unrecorded deed. And a younger deed, taken with such notice, acquires no preference by being recorded in due time." Id. (citing Price v. Watts, 223 Ga. 805, 158 S.E.2d 406, 407 (1967) ). Further, "notice sufficient to excite attention and put a party on inquiry shall be notice of everything to which it is afterwards found that such inquiry might have led." R.W. Holdco, Inc. v. SCI/RW Holdco, Inc., 250 Ga.App. 414, 551 S.E.2d 825, 827 (2001) (citing O.C.G.A. § 23-1-17 ). Georgia courts have explained, "[O]ne claiming title to lands is chargeable with notice of every matter which appears in his deed, and of any matters which appear on the face of any deed, decree or other instrument forming an essential link in the chain of instruments through which he deraigns title, and of whatever matters he would have learned by any inquiry which the recitals of those instruments made it his duty to pursue." Henson v. Bridges, 218 Ga. 6, 126 S.E.2d 226, 228 (1962) ; see also Virginia Highland Civic Assoc., Inc. v. Paces Props., Inc., 250 Ga.App. 72, 550 S.E.2d 128 (2001) (agreement not recorded within the property's chain of title does not provide inquiry notice to bona fide purchaser). A lis pendens was not filed in this case, however.

Georgia law provides transfers of real estate must be recorded. O.C.G.A. § 44-2-3. The recording statute covers conveyances made by judgments of divorce. Therefore, a divorce decree must be registered to be effective as a conveyance of real property against creditors and bona fide purchasers of the property. While an unrecorded conveyance is generally not effective, the filing of a lis pendens may serve to protect the vested interest in marital property acquired by a spouse in a divorce from avoidance because, under Georgia law, a valid notice of lis pendens can provide constructive notice of a pending divorce action. See Vance v. Lomas Mortg. USA Inc., 263 Ga. 33, 426 S.E.2d 873, 875 (1993) (holding a lis pendens filed pursuant to O.C.G.A. § 44-14-610

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Cite This Page — Counsel Stack

Bluebook (online)
584 B.R. 417, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pettie-v-brannon-in-re-brannon-ganb-2018.