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socrateaser
socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 33471
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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If a general partner of a limited partnership who is a co-obligor

Customer Question

If a general partner of a limited partnership who is a co-obligor along with the 100% owner of the GP who has a personal guarantee files chapter 11, creates and automatic stay, and the lender forecloses anyway, is this a wrongful foreclosure in Texas?

Secondly, Under the law at the time in 2003 that was amended and recodified to go into effect Jan. 1, 2006, did the General Partner have an ownership interest in the property when the GP filed chapter 11 in July 2003? After 2006 the GP's interest appears to be personal.

Thanks, XXX@XXXXXX.XXX
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 4 years ago.

The elements of a wrongful foreclosure claim are: (1) a defect in the foreclosure sale proceedings; (2) a grossly inadequate selling price; and (3) a causal connection between the defect and the grossly inadequate selling price. Charter Nat'l Bank-Houston v. Stevens, 781 S.W.2d 368, 371 (Tex. App.-Houston [14th Dist.] 1989, writ denied).

 

Violation of an automatic bankruptcy stay is not an element of the tort of wrongful foreclosure, but even if it were, the other elements are not satisfied, based on the alleged facts stated in the question.

 

Re 2003 (or 2006) partnership law, real property held in the name of a limited partnership is owned in whatever proportion stated in the partnership agreement, which is generally proportionate to each partner's contributions, and no general or limited partner has any "personal" ownership.

 

Hope this helps.

 

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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 33471
Experience: Attorney and Real Estate Broker -- Retired (mostly)
socrateaser and other Bankruptcy Law Specialists are ready to help you
Customer: replied 4 years ago.
Can a General Partner file Chapter 11 Bankruptcy to protect the Limited Partnership's only asset, 96 acres of beach front property, from an imminent wrongful foreclosure against the Limited Partnership after the Stay was wrongfully and fraudulently lifted?
After the GP filed the Chapter 11, the Creditor ignored the GP's Automatic Stay and foreclosed anyway. Does this create a wrongful foreclosure, and therefore the foreclosure is void not merely voidable as we stated in the Pleading?
Doesn't the GP have the right to sue or file bankruptcy to protect the partner’s partnership interest that owns the property that is the only asset to satisfy the debt and extinguish the personal liability of the GP and the 100% owner of the General Partner?   Also, the GP's BK filing was protecting the co-obligors from a deficiency judgment as referenced in a provision that was capitalized and bold highlighted in the deed of trust and guaranty agreement as Waiver of Deficiency Statute.
As expected, the Creditor was the only bidder at the Trustee's sale and could have bought the property for 50% of the note balance and sought a deficiency judgment. The crooked Creditor sold and purchased the property for the note balance which was 15% loan to value.
Expert:  socrateaser replied 4 years ago.

As I already explained, the automatic stay is irrelevant to a claim of wrongful foreclosure. A motion for contempt with the bankruptcy court would have voided the foreclosure. But, that was apparently a long time ago, and a contempt motion brought now would almost certainly fail based on the doctrine of Laches (unreasonable delay and unfair prejudice).

 

Re the other issues, if all this happened in 2003, any recourse would be barred by the statute of limitations (4 years on a written contract under TX law).

socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 33471
Experience: Attorney and Real Estate Broker -- Retired (mostly)
socrateaser and other Bankruptcy Law Specialists are ready to help you
Customer: replied 4 years ago.
The wrongful foreclosure lawsuit was filed the day before the expiration of the 4-year statute of limitations. That same day, the Creditor filed their motion to release the lis pendens, which was denied, and the case is set for trial in Galveston state district court.

Pursuant to your answer regarding the elements of a wrongful foreclosure, there could be a challenge for a defect in the foreclosure proceedings and grossly inadequate selling price, 15% of the value, for 100% of the note balance. My question is:

Based on your answer, a defect in the foreclosure sale proceeding occurred and is verified by the #1 Foreclosure Listing Service est. that has provided an Affidavit that the Notice of Trustee Sale was not listed anywhere in their data base meaning it was not posted in the Clerk's public book or on the board in the lobby of the courthouse.

This is consistent with my findings. 2 days after I received the certified notice of trustee sale, I was at the Clerk's office and did not see the Notice in the public book or lobby bulletin board. However, months after the foreclosure, per my request, the Clerk produced a receipt from their computer verifying Notice was filed at 4:35 pm.

I speculate that the crooked creditor went back to the Clerk's office early the next morning and pulled the Notice out of the public book to avoid any bidders, which is why the Foreclosure Listing Service did not find it and is not in their data base.

This allowed the Creditors to get the property for the note balance, a grossly inadequate selling price that was 15% of value. The property was booked at cost, which intentionally suppressed the Creditor's publicly traded stock, and allowed the company to go private 4 months after the foreclosure for a major loss to the shareholders. This was the most valuable asset and the 2 crooked principals now own the property after me and the shareholders were aced out.

Thank you.

Expert:  socrateaser replied 4 years ago.

I'm not sure whether you wanted more commentary, because I see you posted a second question with the same info as is present here.

 

Assuming you do want me to comment, then based on your description above, it certainly appears that you have met all the requisite elements for the wrongful foreclosure claim. All you have to do is prove it...

 

...and then collect, of course. Crooks usually don't have money to pay judgments, because they burn through their assets as fast as they steal from honest people. I do hope that your defendant has the assets with which to pay.

 

Best of luck to you!

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