In re Perl

Facts: A residential property owner defaults on their mortgage and the property is foreclosed and sold to a new owner. The foreclosed owner refuses to vacate the premises and the new owner commences an unlawful detainer (UD) action. The new owner is awarded a judgment in the UD action and the foreclosed owner files bankruptcy in an attempt to trigger an automatic stay to halt the eviction.

Claim: The foreclosed owner seeks to maintain possession, claiming the automatic stay applies to the UD action since their bankruptcy filing protects their possessory interest in the property.

Counterclaim: The new owner seeks to validate the eviction, claiming the automatic stay does not apply to the UD action since the foreclosed owner’s possessory interest in the property was terminated when the property was foreclosed prior to the bankruptcy filing.

Holding: A United States court of appeals holds the foreclosed owner’s bankruptcy and automatic stay do not affect the eviction proceedings since the original owner lost all possessory interest in the property when the property was foreclosed and thus has no possessory interest to protect with an automatic stay through bankruptcy. [In re Perl (9th Cir. BAP January 8, 2016) __BR__]

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