Memorandum of Decision Re: Property of Estate

FOR THE NORTHERN DISTRICT OF CALIFORNIA In re LOUIS and JANICE JANSSEN,                                         No. 585-03952      Debtors. _________________________/
Memorandum of Decision
     This matter comes before the court on the motion of the debtors in possession for an order declaring property not an asset of the estate. Since it has been noticed to all creditors the court treats it as a request for authority to abandon pursuant to Bankruptcy Rule 6007.      At issue is the real property at 6970 Glenview Drive in Gilroy, California. Title to the property stands in the name of the debtors and Mary E. Janssen, mother of debtor Louis Janssen, as joint tenants. Mary is the sole resident of the property. The debtors allege that they never paid anything for the property, and their names were placed on title solely for probate purposes and to make it appear that they were property owners in order for them to qualify for a loan.      Section 544(a)(3) provides that the debtors' estate has the rights of a bona fide purchaser of real property from the debtors. Since the debtors held record title to two-thirds of the property, the issue is whether they could have passed good title to their interest to a purchaser without Mary's knowledge or cooperation. If they could, then their estate owns two-thirds of the property notwithstanding Mary's equitable claims, and the debtors' motion must be denied.      Mary need not show that she fully perfected her equitable ownership of the whole property in order to prevail; she need only show a cloud on title sufficient to put a potential purchaser on notice of her possible claim. In re Gurs (9th Cir.BAP 1983) 27 B.R. 163; Matter of Elin (DC D.N.J.1982) 20 B.R. 1012. Mary urges as such clouds the presence of her name on the deed and her exclusive possession of the property.      The court is unconvinced by Mary's arguments. Record title indicates that the debtors own two-thirds of the property and that she owns the other third. There is nothing of record to indicate that the debtors could not convey valid title to their two-third interest. Under California law, a joint tenant may convey his or her interest to a third party without knowledge or consent of the other joint tenants. 16 Cal.Jur.3d Part 1, Cotenancy and Joint Ownership, sec. 36. Likewise, each joint tenant has an equal right to possession of the whole. Id. at sec. 21. Therefore, neither her name on the deed as a joint owner nor her exclusive possession was inconsistent with the power of the debtors to convey good title to a bona fide purchaser. Where possession is not inconsistent with record title, there is no need for further inquiry in order to obtain the status of a bona fide purchaser. Smith v. Yule (1866) 31 Cal. 180; Cf. In re Galino (9th Cir.1985) 779 F.2d 546, 550, in which the claim of the estate was defeated only because possession was wholly inconsistent with record title.      Mary's argument that she is protected by section 541(d) is likewise without merit. As the Bankruptcy Appellate Panel has recently reiterated, section 541(d) only protects beneficial owners of property whose interests cannot otherwise be avoided under section 544. In re Tleel (9th Cir.BAP 1987) -- B.R. --.      Mary's weakest argument is that this court has the equitable power to ignore section 544 and do what is "fair." Courts of equity must follow statutes to the same extent as courts of law; bankruptcy courts are no more entitled to ignore the law than other courts. In re Shoreline Concrete Co. (9th Cir.1987) -- F.2d --.      Lastly, the court doubts it would rule in favor of Mary even if it had the power to do so. Having manipulated title in order to avoid probate proceedings and make it appear to the world that the debtors owned her property, she cannot complain when her machinations come back to haunt her. Persons who play games with record title must realize that every benefit to be gained has an attendant risk.      For the foregoing reasons, the debtors' motion must be denied, and the debtors' estate must be found to own two-thirds of the real property. Counsel for objecting party National Intercity Bank shall submit an order consistent with this decision.
Dated: November 26, 1987                                                                                  ________________________                                                                                                                            ALAN JAROSLOVSKY                                                                                                                            U.S. BANKRUPTCY