This case was heard by the court on June 5, 1995 on the motion of the chapter 7 trustee for an order approving the sale for $120,000 of a condominium owned by the debtor. The condominium became property of the estate when the debtor filed a petition for relief under chapter 13 of the Bankruptcy Code on March 11, 1994. The case was converted to a case under chapter 7 of the Bankruptcy Code on June 3, 1994. The condominium is located at 2621 Second Avenue, No. 1402, Seattle, Washington. The property is valued in the schedules to the petition at $145,000 and is listed as being subject to a mortgage in favor of KeyCorp Mortgage, Inc., in the amount of $108,000.

KeyCorp Mortgage, Inc. filed a proof of claim on November 7, 1994 (Claim No. 15) indicating that the payoff on the principal amount of its mortgage as of September 1, 1994 was $107,274.62, and the payoff with interest as of November 15, 1994 was $109,519.14.

The record indicates that at the time of commencement of this case the debtor had been employed as a physician by the Commonwealth of Kentucky for six months. The chapter 13 plan filed with the petition, and as subsequently amended, proposed that the debtor would maintain the payments to KeyCorp on the mortgage on the condo in Seattle. The debtor's budget listed income of $875.00 per month from rental of the condo, but made no provision for a monthly mortgage payment to KeyCorp.

Following the June 3, 1994 conversion of the debtor's case, the court on September 9, 1994 entered an order sustaining the motion of the chapter 7 trustee for appointment of a realtor to sell the condo.

On February 1, 1995 KeyCorp Mortgage, Inc. moved for relief from stay stating the debtor had made no mortgage payments since August 1994. The chapter 7 trustee opposed the motion. The trustee alleged that the property had been listed for sale at $165,000 by the realtor employed by the trustee and that the listing price had thereafter been reduced to $159,500 and more recently to $145,000.

A hearing on KeyCorp's motion for relief from stay was held on February 15, 1995. KeyCorp appeared by counsel. By agreement of the parties the motion of KeyCorp for relief from stay was overruled provided the condo would be sold at auction by the trustee if it had not been sold privately by May 1, 1995.

On March 16, 1995 the trustee served notice by mail on all creditors and parties in interest, including KeyCorp, that the property would be sold at public auction at noon on May 6, 1995, if it had not been sold privately by May 1, 1995. The notice stated the property would be sold free and clear of liens and encumbrances, that liens and encumbrances would attach to the proceeds of sale and would be paid in order of priority after the payment of "all administrative expenses (including but not limited to the commission and expenses for the auctioneer and the chapter 7 bankruptcy trustee in conducting the sale, and payment of all fees and expenses for the attorney for the trustee who conducts the title examination of the property prior to the sale and prepares the deed), and the payment of any outstanding tax liens on the property and any transfer fees to complete the sale of the property." The notice further stated that objections to the sale must be filed in writing with the court within 15 days from the date of the notice. There were no objections to the sale.

By order entered April 6, 1995 the trustee was authorized to employ an auctioneer to conduct the sale. The auctioneer's commission was fixed at 7% of the selling price, with all expenses of advertising and costs of sale to be borne by the auctioneer. On April 13, 1995 an order was entered reciting that no objections had been received and the trustee was authorized to proceed with the sale.

On May 11, 1995 the trustee moved the court for an order approving the sale of the property at the highest bid price of $120,000 and authorizing disbursement of the proceeds of sale as follows:

Auctioneer's Commission $ 8,400.00

Trustee's Commission 3,757.18

Aiken & Fine (Seattle 395.00

Attorneys for Trustee)

State of Washington Excise Tax 2,136.00

Balance to KeyCorp/Nations Bank 105,311.82

$120,000.00

The trustee's motion was noticed for hearing on June 5, 1995.

NationsBank, as successor in interest by merger to KeyCorp Mortgage, Inc., objects to the proposed disbursement of funds from the sale of the condo.

The record indicates the debtor paid $158,000 for the condominium on or about December 10, 1991. In the schedules to her petition and in an addendum to her original chapter 13 plan the debtor valued the property at $145,000 and estimated her equity in the property at $37,000. The debtor claimed an exemption under Kentucky law in the property but the exemption was objected to and was disallowed. There was good reason to believe on the basis of the record that unsecured creditors would benefit from the sale of the property.

Counsel for NationsBank argues the trustee should have abandoned the property after the trustee had been unsuccessful for several months in an attempt to sell the property at private sale. The problem with this argument is that counsel for KeyCorp (before counsel for NationsBank entered the picture) agreed to the overruling of its motion for relief from stay provided the property was disposed of at public auction after a period of delay during which the attempt to sell the property at private sale was to continue.

Having agreed to the auction and not having objected to the terms of the auction and the expenses to be paid from the proceeds of sale as clearly set out in the notice of sale, NationsBank is precluded from raising objections to the expenses of sale after the fact.

Counsel for NationsBank argues that if the property had been abandoned by the trustee it could have foreclosed on the property at a nonjudicial foreclosure under Washington law for an approximate cost of $1,750. That may be true, but because we do not know the price the property would have brought if sold under such a procedure, an issue incapable of positive proof by either the trustee or the objecting creditor, the overall loss to NationsBank might have been greater upon such a sale.

The court is satisfied that NationsBank benefitted from the sale of the condo by the trustee. The bank contends that it did not benefit from the sale because it will not receive from the proceeds of the sale the full amount of principal and interest due on its loan. The logical extension of this argument is that the bank would have fared better if the trustee had abandoned the estate's interest in the property and the property had been sold by the bank at a nonjudicial foreclosure sale. There is no evidence in the record to support that hypothesis. This is like saying that if a creditor is owed one dollar and is paid only 90 cents, the creditor does not realize any benefit from the payment. The language of the statute permits recovery by the trustee of the costs of disposing of property to the extent of "any" benefit to the secured creditor. In this instance the sale will result in payment of most of the principal of the indebtedness, which obviously is a benefit to the bank by any measure.

The court is also satisfied that the costs are reasonable. The bank received the benefit of the services of the realtor-auctioneering firm in marketing the property for a period of more than six months and in advertising the property for sale during that period and in advertising and conducting the auction. The trustee's fee is the statutory amount. The fee of the Seattle attorneys for conducting a title search and preparing a deed is modest.

Moreover, on the facts of this case, the court is satisfied that NationsBank, through its predecessor in interest, consented to the sale and thereby agreed to the assessment against the proceeds of sale of the costs and administrative expenses to which it now objects.

Accordingly, the court is of the opinion that the objection of NationsBank to the disbursement of the proceeds of sale proposed by the trustee should be overruled.

Dated:

By the court -

_____________________________

JOE LEE, CHIEF JUDGE

Copies to:

Stephen Palmer, Esq.

Rick DeBlasis, Esq.

W. Thomas Bunch, Esq.

U.S. Trustee

In conformity with the memorandum opinion of the court this day entered, IT IS ORDERED that the motion of the chapter 7 trustee for an order approving the sale of the condominium located at 2621 Second Avenue, No. 1402, Seattle, Washington, for the sum of $120,000 be and the same is hereby sustained. The objection of NationsBank to the disbursement of the proceeds of sale proposed by the trustee be and the same is hereby overruled.

Dated:

By the court -

____________________________

JOE LEE, CHIEF JUDGE

Copies to:

Stephen Palmer, Esq.

Rick DeBlasis, Esq.

W. Thomas Bunch, Esq.

U. S. Trustee