Lovald v. Tennyson (In Re Wolk), 451 B.R. 468

Debtor and non-debtor spouse own a single-family home as tenants in common in Rapid City, SD, amid a divorce proceeding.
Debtor did not claim a homestead exemption in the house at filing.
Trustee sought authority to sell the property under 11 U.S.C. §363(b) and (h), arguing partition is impracticable and sale free of the co-owner’s interest would realize more for the estate.
SD law creates a presumption of equal shares for co-owners in record title; this presumption is rebuttable by showing unequal contributions.
Evidence showed the co-owner contributed more toward purchase and paid the first mortgage; the court found all equity ($63,000) belonged to the co-owner, not the estate.
After remand, the bankruptcy court again denied the sale, concluding the estate would not benefit and there would be substantial detriment to the co-owner if sold.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §363(h) allows sale of the estate’s undivided interest with co-owner’s interest when partition is impracticable.	Wolak asserts §544(a) status defeats SD presumption; sale to allocate estate half the equity is permitted.	Tennyson contends SD equity presumption and health detriment prevent sale; no net estate benefit.	Sale denied; §363(h) not satisfied.
Whether §544(a) rights alter SD’s equal-ownership presumption for purposes of §363(h).	Trustee claims §544(a) rights negate unequal-contribution rebuttal.	Defendant maintains SD contribution evidence remains controlling; §544(a) does not override.	Remand unnecessary to change result; even if §544(a) applied, outcome unchanged.
Whether the trustee met the balancing test under §363(h)(3) to show benefit to the estate outweighs detriment to the co-owner.	Trustee argues any sale would benefit the estate by realizing a share of equity.	Co-owner argues the estate gains nothing and sale would harm her health and equity was contributed by her.	Estate failed to show benefit outweighed detriment.
What standard governs the bankruptcy court’s decision to authorize sale under §363(h)?	Court should grant discretionary sale if elements are satisfied.	Court must weigh benefits and detriments; discretion favors denial here.	Discretion exercised properly; no abuse of discretion.

First Nat'l Bank of Olathe v. Pontow, 111 F.3d 604 (8th Cir. 1997) (standard for reviewing §363(h) dispositions and related burdens)
Sholdan v. Dietz (In re Sholdan), 108 F.3d 886 (8th Cir. 1997) (appeals court delineates burden and discretion in §363(h) matters)
Probasco v. Eads (In re Probasco), 839 F.2d 1352 (9th Cir. 1988) (discretionary nature of §363(h) sale and balancing test)
Cudmore v. Cudmore, 311 N.W.2d 47 (S.D.1981) (presumption of equal shares in tenancy in common; rebuttable by unequal contributions)