## Facts

- Peter Medaglia owned a Rhode Island residence that served as his principal home and was encumbered by a mortgage.
- After Medaglia defaulted, the mortgagee proceeded with a foreclosure by sale under state law.
- On September 9, 2008, the property was auctioned at a foreclosure sale, and Robert Buonano was the successful bidder.
- That day, a memorandum of sale was executed and Buonano paid the required deposit.
- On September 11, 2008, before Buonano recorded the foreclosure deed, Medaglia filed a Chapter 13 bankruptcy petition.
- Buonano filed a motion for relief from the automatic stay to record the deed and obtain possession of the property.
- Medaglia opposed the motion, arguing that he could still cure the mortgage default in Chapter 13 because the deed had not yet been delivered and recorded.

## Issues

1. Under 11 U.S.C. § 1322(c)(1), does a Chapter 13 debtor’s right to cure a default on a mortgage secured by the debtor’s principal residence terminate when the property is sold at the foreclosure auction, or does it continue until the foreclosure deed is delivered and recorded?

## Decision

- The court held that, for purposes of § 1322(c)(1), a debtor’s right to cure ends when the residence is sold at a foreclosure sale conducted in accordance with applicable nonbankruptcy law.
- The court treated the foreclosure auction as the operative event; later steps such as deed delivery and recordation did not extend the federal cure period.
- Because the auction occurred before Medaglia filed Chapter 13 and the sale was not shown to be invalid under Rhode Island law, Medaglia could not use Chapter 13 to cure and reinstate the mortgage.
- The court granted Buonano relief from the automatic stay to record the deed and proceed to obtain possession.

## Legal Principles

- Section 1322(c)(1) allows a Chapter 13 debtor to cure a default on a lien secured by the debtor’s principal residence only “until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law.”
- The phrase “sold at a foreclosure sale” refers to the foreclosure auction itself as a discrete event, not a continuing sequence that remains open until deed delivery or recordation.
- The requirement that the sale be “conducted in accordance with applicable nonbankruptcy law” functions as a validity condition for the auction, not as a directive that state-law title-transfer timing controls when the property is “sold” for § 1322(c)(1).
- Section 1322(c)(1) limits the broader cure-and-maintain authority in § 1322(b)(5); once the foreclosure auction has occurred in compliance with state law, Chapter 13 cannot be used to revive cure rights that have ended under the federal cutoff.
- When a prepetition foreclosure auction has occurred and the purchaser has enforceable rights under state law, cause exists to grant stay relief so the purchaser may complete post-sale formalities such as deed recordation and steps toward possession.

## Conclusion

In re Medaglia holds that a Chapter 13 debtor’s right to cure a home-mortgage default under § 1322(c)(1) expires when the property is sold at a properly conducted foreclosure auction; therefore, a bankruptcy filing after the auction but before deed recordation does not restore cure rights, and the foreclosure purchaser may obtain relief from the automatic stay to record the deed and pursue possession.


In re Medaglia, 402 B.R. 530 (2009)