Chapter 13; Whether a transfer of property title for tax delinquency constituted a “preferential transfer”; 11 USC §§ 547(b)(4)-(5); Whether the transfer occurred during the 90-day “lookback period” before bankruptcy was filed; The “more than” test; Whether defendant needed to file a cross-appeal; Whether there was a “transfer”; § 101(54)(D); Rights to/interest in the property; The Michigan General Property Tax Act (GPTA); MCL 211.78g(1) & (8)(b); Establishing the “perfection date” (§ 547(e)(2)); Race-notice recording; MCL 565.29

[This appeal was from the ED-MI.] The court held that defendant-Bay County Treasurer’s foreclosure on debtor-Reinhardt’s home for unpaid taxes constituted a “preferential transfer” in this Chapter 13 case. Bay County initiated a foreclosure on Reinhardt’s home for failure to pay her 2019 property taxes. It received title to the property when “a Michigan court entered a foreclosure judgment against the property three years later,” and she filed for Chapter 13 bankruptcy shortly after, along with a complaint seeking to avoid the title transfer as preferential. The issues in dispute in the bankruptcy court were whether the transfer occurred during the 90-day “lookback period” and whether the transfer would enable the creditor to receive more than it would have if the transfer had not occurred and if the debtor’s estate had been liquidated in a Chapter 7 bankruptcy—the “more than” test. The bankruptcy court granted defendant summary judgment after ruling that even though the transfer had occurred inside the lookback period, Reinhardt could not satisfy the “more than” test. The district court affirmed. On appeal, the court first concluded that it was not necessary for defendant to file a cross-appeal. It then explained that the definition of a transfer “includes involuntary modes of transfer that ‘occur[] when property is transferred by operation of law, such as by means of an execution of judgment.’” Under Michigan law, when Reinhardt forfeited her property due to not paying her taxes, the only interest defendant received “was a right to seek a judgment of foreclosure; the Treasurer did ‘not acquire a right to possession or any other interest in the property.’” Pursuant to the 2/18/22 foreclosure judgment, when “Reinhardt didn’t pay off the tax lien, the foreclosure judgment took effect on March 31. On that day, title to the property vested absolutely in the Treasurer, and Reinhardt lost all rights to” it other than “the right to claim remaining proceeds from the Treasurer’s sale of the property.” Thus, a transfer occurred on 3/31, less than 90 days before Reinhardt filed her bankruptcy petition on 6/10, and was “perfected” when the Treasurer recorded the foreclosure judgment on 4/5/22. As to the “more than” test, a Treasurer retains a 5% sales commission from a tax sale, and this ensured that the 3/31 “transfer enabled the Treasurer to receive more than he would’ve if the transfer hadn’t happened and the case was a Chapter 7 bankruptcy.” Reinhardt was entitled to summary judgment. Reversed.