Lyubomir Alexandrov v. Todd LaMont
740 F.3d 397
| 7th Cir. | 2014Background
- Todd and Christina LaMont owned a home in Grundy County, Illinois; special-assessment taxes went unpaid and the county sold the property at an annual tax sale to Advantinet, whose interest was assigned to Lyubomir Alexandrov.
- Alexandrov received a Certificate of Purchase (a statutory, non‑ownership tax purchaser interest) in Nov. 2008; the LaMonts filed Chapter 13 in Dec. 2008 and proposed/confirmed a plan that provided installment payments to the Village of Minooka for the delinquent taxes.
- Under Illinois law, a Certificate of Purchase gives the purchaser statutory remedies (a tax lien equivalent and the right to petition for a tax deed after a redemption period of ~2–3 years), but it does not transfer legal or equitable title while the redemption period runs.
- Alexandrov filed a petition for a tax deed after the redemption period expired, but the county court would not issue a deed because the LaMonts’ bankruptcy stay was in effect; he sought relief from the automatic stay in bankruptcy court and then in district court.
- Bankruptcy and district courts held the tax purchaser’s interest is a secured claim (treatable and modifiable in Chapter 13); therefore the automatic stay barred Alexandrov from obtaining a tax deed and the confirmed plan’s treatment satisfied his claim.
- On appeal, the Seventh Circuit affirmed: the Certificate of Purchase is a secured claim against the debtors or their property (not an executory future real‑property interest), so the Chapter 13 plan and automatic stay control.
Issues
| Issue | Alexandrov (plaintiff/appellant) | Debtors (defendant/appellees) | Held |
|---|---|---|---|
| Nature of tax purchaser interest: real‑property future interest vs. claim | Certificate creates an executory/future property interest that automatically divests debtor after redemption period | Certificate is a statutory tax lien/species of personal property; no present divestment of title | Certificate is a secured claim (statutory tax lien), not an executory future real‑property interest |
| Whether Certificate qualifies as a "claim" under Bankruptcy Code §101(5) | No — relies on Illinois decisions holding no direct right to payment from taxpayer | Yes — purchaser has a right to payment or equitable remedy against debtor’s property (claim includes claims against property) | Certificate corresponds to a claim (right to payment or equitable remedy) under §101(5) and §102(2) |
| Whether confirmed Chapter 13 plan may modify/treat the tax purchaser’s interest | Plan cannot modify proprietary right; purchaser entitled to pursue tax deed after redemption period | Plan may treat secured claims and bind creditors if plan satisfied; installment treatment is permissible | Chapter 13 plan may treat and modify secured tax purchaser claims; successful plan performance extinguished purchaser’s remedy |
| Whether automatic stay barred issuance of tax deed and whether stay should be modified | Stay should not block ministerial perfection of purchaser’s interest; alternatively, purchaser entitled to relief if not a claim | Issuance of tax deed is attempt to obtain estate property/enforce lien and is stayed; no modification needed where claim treated | Automatic stay applies; relief was properly denied because purchaser’s claim was treated in the Chapter 13 plan |
Key Cases Cited
- Johnson v. Home State Bank, 501 U.S. 78 (U.S. 1991) (broad definition of "claim" includes enforceable obligation and rights to proceeds from encumbered property)
- Penn. Dept. of Pub. Welfare v. Davenport, 495 U.S. 552 (U.S. 1990) (restitution obligation can be a claim because it is an enforceable obligation)
- In re Smith, 614 F.3d 654 (7th Cir. 2010) (Certificate of Purchase does not affect debtor’s legal or equitable title during redemption period)
- Phoenix Bond & Indem. Co. v. Pappas, 741 N.E.2d 248 (Ill. 2000) (tax purchaser’s certificate does not alter delinquent owner’s title prior to tax deed)
- City of Chicago v. City Realty Exchange, Inc., 262 N.E.2d 230 (Ill. App. Ct. 1970) (Certificate of Purchase characterized as a lien for taxes)
- In re Bates, 270 B.R. 455 (Bankr. N.D. Ill. 2001) (treating tax purchaser interest as a secured claim in bankruptcy)
- Matter of Tynan, 773 F.2d 177 (7th Cir. 1985) (post‑foreclosure purchaser’s presumptive right to ownership and implication for estate treatment)