Real Property Law Section Blog

Under Bankruptcy Code Section 1146(a), "[t]he issuance, transfer, or exchange of a security, or the making or delivery of an instrument of transfer under a plan confirmed under section 1129 of this title, may not be taxed under any law imposing a stamp tax or similar tax". The United States Supreme Court, in a decision issued June 16, 2008, reversing the Eleventh Circuit Court of Appeals, held that the 1146(a) exemption from stamp taxes only applies to a transfer made by a Debtor in bankruptcy after confirmation of a plan of reorganization. In the case under review, the sale on March 16, 2004 of substantially all of the Debtor's assets under Code Section 363(b)(1) was made under a Bankruptcy Court Order providing that the transfer was exempt from Florida stamp taxes. The Chapter 11 Plan was filed on March 26, 2004, amended on July 31, 2004 and confirmed by the Bankruptcy Court on October 21, 2004. Before the plan of reorganization was confirmed, the State of Florida filed an objection, seeking the payment of State stamp taxes since the transfer was not "under a plan confirmed". The Bankruptcy Court held that the sale was exempt from Florida's stamp tax because the transfer was necessary to consummate the plan, and the Court of Appeals for the Eleventh Circuit affirmed that ruling. Florida Department of Revenue v. Piccadilly Cafeterias, Inc. is reported at 2008 WL 2404077.

The Defendant-homeowner brought a motion, pro se, for an Order vacating a judgment of foreclosure and sale and barring any attempt to sell her home. She alleged that the Plaintiff engaged in "predatory lending" under New York's Banking Law Section 6-l ("High-cost home loans"). Judge Palmieri of the Supreme Court, Nassau County, denied the motion and vacated the temporary stay that had been entered. The two mortgage loans being foreclosed were not "high cost" loans under the Banking Law; no proof was submitted that there was either fraud or a failure to disclose the loans' terms. Nor was proof submitted that the Defendant was protected by the Home Ownership and Equity Protection Act of 1994 (15 USC Section 1639). According to the Court, "…absent the violation of some statute or other relevant legal principle the law does not permit judges to simply ignore payment obligations voluntarily taken on by mortgagors even if it should have been evident to both lender and borrower that the loan was likely beyond the borrower's ability to repay". Alliance Mortgage Banking Corp. v. Dobkin, decided March 28, 2008, is reported at 2008 WL 1758864.