McCannon v. Marston
United States Court of Appeals for the Third Circuit
679 F.2d 13 (1982)
In 1973, Miriam McCannon (plaintiff) agreed to buy a Pennsylvania condominium from The Drake Hotel, made a down payment, and moved in and continuously resided there, but never recorded the purchase and the sale was never formally settled. After The Drake filed for Chapter 11 bankruptcy in 1979, McCannon sought to have the automatic stay lifted and her purchase agreement specifically enforced, but the bankruptcy trustee, Marston (defendant), objected, and the bankruptcy court held the trustee could avoid McCannon's interest under section 544(a)(3), which gives the trustee the status of a bona fide purchaser without regard to actual knowledge. The district court affirmed, and McCannon appealed.
Whether, under 11 U.S.C. section 544(a)(3), a bankruptcy trustee may avoid an agreement by the debtor to transfer real property where the transferee would have priority, under applicable state law, over a subsequent purchaser with the same level of notice as the trustee.