The Case for the Tax Collector

01 Jan 2009

This article considers the question: Is a transfer of property via a noncollusive, properly conducted property tax foreclosure process entitled to respect in bankruptcy against the trustee's fraudulent transfer avoiding power? It answers this question in the affirmative. Part II examines the Court's opinion in BFP v. Resolution Trust Corp. and how courts have applied it in fraudulent transfer challenges to tax foreclosure transfers. Most courts have read BFP as requiring a comparison between the conditions under which the tax foreclosure at issue occurs and mortgage foreclosure. If the tax foreclosure process does not require public sale with competitive bidding, then BFP does not apply and the tax foreclosure transfer is not necessarily for "reasonably equivalent value in exchange." Part III criticizes this trend and makes the argument in defense of the tax collector.