Stewart v. Farmers Bank (In re Johnson)

MEMORANDUM

KEITH M. LUNDIN, Bankruptcy Judge.

The trustee seeks a declaratory judgment of entitlement to the proceeds from the sale of the debtors’ land. The issues are: (1) whether postpetition perfection of the bank’s security interest by payment of state recordation taxes and statutory penalties relates back to perfection of the original deed of trust to protect the bank’s security interest from avoidance by the trustee; and (2) if the bank’s security interest is avoided by the trustee, whether the debtors can claim an exemption in the sale proceeds. The court finds that the bank’s…