Who Qualifies as a Single Asset Real Estate Debtor?

Related Ads

In a Chapter 11 bankruptcy case, who qualifies as a Single Asset Real Estate debtor? The debtor can be an individual, a married couple or a corporation that owns an entity known as an SARE or Single Asset Real Estate. Interestingly, a single asset real estate debtor cannot be a family farmer according the definition of SARE in the Bankruptcy Code Section 101(51B).

What is NOT Single Asset Real Estate?

  • Your residence, even if you own only one house.
  • A residential property with you own that has fewer than 4 units
  • Hotel
  • Hospital
  • Golf Course
  • Marina

Of course, the list above is not all inclusive but if you or your corporation owned just one hotel, golf course, marina or hospital why wouldn't you qualify as a single asset real estate debtor? The reason is that there is precedence in the courts to have found that if, as an example you owned a hotel you could receive substantial income from a restaurant or gift shop in your lobby or golf course owners receive income from golf cart rentals, restaurants and gift shops that operate on their premises.

What IS Single Asset Real Estate?

Single asset real estate is a single property or project that generates most of the income of a debtor without also operating a separate or related business that generates substantial income on the property for the debtor.

A single project can be made up of more than one property if they have a related purpose or plan that involves their use. An example of this would be a subdivision containing many homes.

To qualify as SARE, the single property or project is generating income from the operation of the real property. Examples of specific types of real  property that can qualify as single asset real estate include:

  • Apartment buildings that generate income by collecting rent, and also have more than four apartments
  • Office buildings where the income generated for the debtor is from collecting office rent, not running other businesses on the property
  • Strip Mall, again where the debtor's income from the property is generated by tenant store rent and not by the operation of the businesses

To qualify as a single asset real estate debtor it is also assumed that you are seeking debt reorganization under Chapter 11.

Get Legal Help

It is very important that you retain a competent bankruptcy attorney who can explain whether or not you qualify as a single asset real estate debtor and its affect on your Chapter 11 bankruptcy proceedings.

NOLODRUPAL-web1:DRU1.6.12.2.20161011.41205