Daily Development for
Monday, November 24, 1997
by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
Today's reporter is Jim Stillman of Murphy, Weir & Butler, Los Angeles
BANKRUPTCY; CHAPTER 13; PRE-PETITION DEFAULTS; INSTALLMENT LAND CONTRACT: Notwithstanding a pre-petition state court judgment for possession on the installment land contract vendor's "suit in ejectment," the debtor vendee may be allowed to cure the delinquencies and reinstate the contract in his chapter 13 plan.
In re Grove, 1997 Bankr. LEXIS 717, 30 BCD 1143 (Bankr. W.D.Pa. 1997).
Under Pennsylvania law, the installment land contract created a lien and is to be treated as a mortgage for purposes of foreclosure and execution, citing Anderson Contracting Co. v. Daugherty, 274 Pa. Super. 13. Also, the debtor remained in possession as of the petition date, and the court is of the view that the Third Circuit has held that the possessory interest, even of a tenant at sufferance, is sufficient to invoke the protections of the stay.
Reporter's Comment: While the reported opinions of the courts of the Commonwealth of Pennsylavania establish, correctly, that a long-term installment land contract is a lien-creating security instrument notwithstanding its archaic title language, the same opinions apparently indicate to other federal courts in Pennyslvania that the lender's assignment of rents, a far plainer security, is in fact a title-creating conveyance. See In re Jason Realty and its woeful progeny, commented on regularly in these pages.
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