In Re Dekoning

US Bankruptcy Court, ED California Fresno Div., No. 13-16634-13-13, August 27, 2014: Conservation easement may not diminish market value of debtor’s residence in bankruptcy.

In this bankruptcy matter, the Debtor, Dekoning, sought to have the court accept a fair market value of his residence low enough so a mortgage holder would be deemed an unsecured creditor. The residence’s land was in part subject to a conservation easement which imposes restrictions on the access and use of property on both sides of a creek and on an “intermittent drainage” which cross the property. There was no expert appraisal or objective testimony about the effect of the conservation easement on the fair market value of the property. As part of the somewhat informal valuation of the premises, Dekoning asserted the conservation easement reduced the property’s value.. The court concluded, because Dekoning was once fined $10,000 for driving a tractor on the conservation easement, that he had a “grudge” against the easement holder over its enforcement of the easement and his negative opinion about the conservation easement was based on subjective factors.

The court rejected Dekoning’s valuation of the property for a variety of reasons, including the court’s statement that, “The Conservation Easement may be a source of aggravation to the Debtor, based on his personal experience and goals for the Property, but that does not mean that another buyer, with the same information the Debtors had, would not view the Easement as an asset to be enjoyed.”

Decision available at http://www.gpo.gov/fdsys/pkg/USCOURTS-caeb-1_13-bk-16634/pdf/USCOURTS-caeb-1_13-bk-16634-0.pdf. Decision may eventually also be available at http://www.caeb.uscourts.gov/Opinions.aspx (search under Judge Lee’s opinions).

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