Sale Free and Clear

SALE FREE AND CLEAR OF LIENS

If authorized by the court, property of the bankruptcy estate may be sold by the debtor in possession (Chapter 11 or 13) or by the trustee (Chapter 7) free and clear of liens. Code, Sec. 363(f). The motion for the order to sell free and clear of liens must be served on all lien holders, and notice of the sale must be given to all parties in interest. It must be verified that any creditor whose lien is divested received notice of the sale. The court may order the sale free and clear of all liens, or free of a certain class of liens but subject to others.

In order to insure a sale of scheduled property free and clear of liens, the following is required to be recorded in the Public Records:

1. Proof that all parties having an interest in the property and all creditors whose lien is divested were given proper notice of the motion and hearing.
2. The court docket showing no objections to the motion, and also that there was no appeal of the order authorizing the sale.
3. Certified copy of the Order of the bankruptcy court authorizing the sale free and clear of liens and over-ruling any objections that had been filed.
4. The deed conveying title should state that it is free and clear of liens pursuant to the bankruptcy court order.

However, because of decisions by the United States Supreme Court, WFG will not rely on a bankruptcy court order that property be sold free and clear of liens of the state, a county or a municipality. This includes ad valorem taxes. Fidelity will require that such liens be specifically released by the governmental entity.