Opinion
Case No. 15-55785
12-28-2015
In re: Gino Ezio Santia, Debtor.
Chapter 13 ORDER GRANTING CREDITORS FRANCESCO AND MARGARET DEL VECCHIO'S MOTION TO LIFT THE AUTOMATIC STAY
Debtor and creditors, Francesco and Margaret Del Vecchio ("Creditors"), executed a land contract for property located in White Lake Township, Michigan ("the Property"). After Debtor fell behind in his payments-triggering the land contract's forfeiture provision-Creditors obtained a judgment for possession in state court. One day before the 90-day redemption period expired, Debtor filed Chapter 13 bankruptcy.
Creditors seek relief from the automatic stay to obtain a writ of eviction; Debtor argues that the filing of his bankruptcy petition tolls the redemption period and proposes to pay the redemption amount through his Chapter 13 plan. Debtor's arguments are unavailing. For the reasons stated on the record, as supplemented below, the Court GRANTS Creditors' motion.
For purposes of analyzing Debtor's redemption rights in bankruptcy, the Court treats the land contract like a mortgage. A debtor's interest in a land contract-similar to a mortgage-is extinguished when he fails to timely redeem. In re Horton, 302 B.R. 198, 203 (Bankr. E.D. Mich. 2003). The defining date-after which a mortgagor may not cure an arrearage through a Chapter 13 plan-is the foreclosure sale. In re Oliver, 407 B.R. 442 (B.A.P. 6th Cir. 2009) (once pre-bankruptcy foreclosure sale has taken place, a debtor-mortgagor cannot revive and reinstate the mortgage and cure the arrearage under a chapter 13 plan). Similarly, the Court finds that the defining date after which a land contract vendee may not cure a forfeiture arrearage through a Chapter 13 plan is the entry of a judgment for possession. In both cases, the exclusive remedy is redemption. Because Debtor did not file bankruptcy until after the state court's entry of the judgment for possession, he cannot pay the forfeiture redemption amount through his Chapter 13 plan. Fed. Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428, 1442 (6th Cir. 1985) ("the practical effect of allowing the debtor to pay the redemption amount over an extended period would in many respects be the same as a suspension of the redemption period"); In re Bramlett, 483 B.R. 244, 246 (Bankr. N.D. Ala. 2012) (a debtor cannot exercise a right of redemption through a Chapter 13 plan); Matter of Delex Mgmt., 155 B.R. 161, 168 (Bankr. W.D. Mich. 1993) (vendor can obtain a writ of eviction because the land contract relationship was extinguished after the statutory redemption period expired). Therefore, Debtor's only recourse was to pay $5,571.04 before the redemption period expired on October 29, 2015. The filing of Debtor's bankruptcy petition does not toll the state-law forfeiture redemption period. In re Bramlett, 483 B.R. at 246 (section 362(a) does not toll the running of the redemption period beyond the 60-days provided in section 108(b)).
Michigan Complied Laws § 600.5744 provides, "when a judgment for possession is based on the forfeiture of an executory contract for the purchase of the premises, a writ of restitution shall not be issued until the expiration of 90 days after the entry of judgment for possession if less than 50% of the purchase price has been paid [.]" Technically, the 90-day redemption period expired on October 28, 2015-one day before Debtor's bankruptcy filing. However, the judgment for possession entered by the 52-2 Judicial District Court ordered the Debtor to pay the redemption amount by October 29, 2015.
11 U.S.C. § 108(b) arguably extends Debtor's right to redeem an additional 60-days after the petition date. Accordingly, Debtor may have until December 28, 2015 to timely redeem. --------
Because the state court judgment of possession was entered before Debtor filed bankruptcy, Debtor is not permitted to pay the redemption amount through his Chapter 13 plan, and his bankruptcy petition does not toll the redemption period, the Court GRANTS Creditors' motion to lift the automatic stay-for cause-under 11 U.S.C. § 362(d)(1).
IT IS ORDERED. Signed on December 28, 2015
/s/ Mark A. Randon
Mark A. Randon
United States Bankruptcy Judge