Nebraska Bank Dodges $8M Bullet As Bankruptcy Court Ruling Invalidating Improperly Notarized Mortgage Is Reversed On Appeal

In a follow-up to an earlier post, the United States Bankruptcy Appellate Panel for the U.S. Court of Appeals, Eighth Circuit, has recently reversed a ruling by a Nebraska Federal Bankruptcy Court that had invalidated an $8 million mortgage due to the improper notarization by the bank's president of a mortgage securing a loan taken out by the executive's brother-in-law.

The thumbnail summary of the court's reasoning for the reversal in this case (appearing on the 8th Circuit's website, prepared by the court's clerk, and not a part of the opinion) states:

• BowlNebraska failed to demonstrate that it was without actual or constructive notice of the Bank's interest and thus a bona fide purchaser under Nebraska law; consequently, it could not avoid the bank's liens pursuant to the strong-arm provisions of the Bankruptcy Code, and the district court's judgment in favor of BowlNebraska avoiding the liens is reversed.

For the ruling, see In re BowlNebraska, L.L.C. (aka BowlNebraska, L.L.C. v. Omaha State Bank), No. 10-6016 (B.A.P. 8th Cir., July 1, 2010).

For the earlier post, see Bank President Laments: "Never Do Business With Family!" As Improper Notarization Allows Brother-In-Law/Borrower To Successfully Void Lender Mortgage.