Opinion ID: 1267942
Heading Depth: 2
Heading Rank: 3

Heading: Pre-Petition Appreciation of Exempted Property

Text: Greene further argues that the bankruptcy court erred in failing to provide him an evidentiary hearing as to the amount of pre-petition appreciation of the Property before granting the trustee authorization to sell the Property. The Property subsequently sold for $370,000, far more than the $240,000 to $260,000 he estimates the property was worth in 2004. His claim, in essence, is that the bankruptcy court did not determine what portion of this appreciation occurred prior to the filing of his petition in 2005. Any pre-petition appreciation, he argues, properly is exempted from the estate. We agree with the bankruptcy court that, on Greene's own admissions, no such pre-petition appreciation occurred. In his 2005 Chapter 7 petition, the petition at issue in this appeal, he declared, under penalty of perjury, that the value of the Property was $240,000. If the value of the property in 2005 when he filed the petition was $240,000, the subsequent sale of the property for a higher amount necessarily captures only post-petition appreciation. Greene does not argue that any such post-petition appreciation is exempt. Indeed, his claim is that the bankruptcy court failed to conduct a hearing to determine how to divide the appreciation pre- and post-petition, so that the pre-petition appreciation would be exempted. As the bankruptcy court correctly held, no evidentiary hearing is necessary to resolve this question on these facts. [12] If Greene's claim is that his 2005 petition incorrectly declared the value of the Property, the proper course of action would be for him to amend his petition pursuant to FED. R. BANKR. P. 1009(a), in which [a] voluntary petition, list, schedule, or statement may be amended by the debtor as a matter of course at any time before the case is closed. We note that a court may disallow the amendment only upon a showing of bad faith or prejudice to third parties, Arnold v. Gill (In re Arnold), 252 B.R. 778, 784 (9th Cir.BAP2000) (quoting Magallanes v. Williams (In re Magallanes), 96 B.R. 253, 256 (9th Cir. BAP1988)), but take no position as to whether bad faith or prejudice exists in this case. We therefore hold that, absent any proper amendment to the petition, the bankruptcy estate is entitled to retain all of the appreciation in the value of the Property; that is, any value in excess of $240,000.