Opinion ID: 484920
Heading Depth: 3
Heading Rank: 1

Heading: Debtor's Real Property Interest

Text: 12 Section 544(a)(3) gives Walsh, as bankruptcy trustee, the power to avoid liabilities that could be avoided by a hypothetical bona fide purchaser of real property. Nevertheless, Placer maintains that section 544(a)(3) will not protect the proceeds of the sale of the debtor's real property interest in the Waters' Edge Apartments because a bona fide purchaser under California law (1) cannot be assigned a partnership interest, and (2) cannot take a partnership interest free of partnership liabilities. However, Cal.Corp.Code section 15010(3) states: 13 Where title to real property is in the name of one or more of the partners, whether or not the record discloses the right of the partnership, the partners in whose name the title stands may convey title to such property, but the partnership may recover such property ... unless the property has been conveyed to a bona fide purchaser for value without knowledge that the partner in executing the conveyance has exceeded his authority. 14 Section 15010(3) provides for the situation at issue here. Walsh, by virtue of section 544(a)(3), has the rights of a hypothetical bona fide purchaser without notice. The language of the section renders the trustee's actual knowledge irrelevant. The Third Circuit, in McCannon v. Marston, 679 F.2d 13, 16-17 (3d Cir.1982), held that constructive notice or inquiry notice may limit the trustee's section 544(a)(3) avoidance power, but neither constructive notice nor inquiry notice are present in this case. 15 Moreover, in Barton v. Ludy, 11 Cal.2d 1, 76 P.2d 654 (1938), the California Supreme Court allowed an assignment of partnership real property when the assignee had no notice of the partnership. Although Barton was decided under a predecessor to the present California partnership act, the result is consistent was the language of section 15010(3). Section 544(a)(3) will protect the debtor's real estate interest from the partnership claims asserted by Placer.