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Understanding Single Asset Real Estate (Bankruptcy) and Its Legal Framework
Definition & Meaning
Single asset real estate (SARE) refers to a specific type of property or project that generates most of the income for a debtor, excluding residential properties with fewer than four units. In bankruptcy cases, this term is crucial as it defines how the Bankruptcy Code applies to such assets. The debtor's activities are primarily limited to operating the real estate itself, with no significant business activities conducted beyond that.
Table of content
Legal Use & context
The term single asset real estate is primarily used in bankruptcy law. It is relevant in cases where a debtor has only one property that serves as their primary source of income. This classification can affect how bankruptcy proceedings are managed, particularly regarding the rights of creditors. Users can often manage related forms and procedures themselves using templates provided by services like US Legal Forms, which are drafted by legal professionals.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A commercial building owned by a developer that generates rental income is classified as single asset real estate if it is the only property they own and manage.
Example 2: A shopping center that is the sole source of income for a business entity may also qualify as single asset real estate in bankruptcy proceedings.
Relevant laws & statutes
The primary statute governing single asset real estate is found in the Bankruptcy Code, specifically:
11 U.S.C. § 101(51B): Defines single asset real estate.
11 U.S.C. § 362(d): Discusses relief from the automatic stay for creditors in single asset real estate cases.
Comparison with related terms
Term
Definition
Key Differences
Single Asset Real Estate
A property generating most of a debtor's income, with limited business activities.
Focuses on one property with specific income criteria.
Multi-Asset Real Estate
Multiple properties owned by a debtor.
Involves various income sources and different operational complexities.
Common misunderstandings
What to do if this term applies to you
If you find yourself in a situation involving single asset real estate, consider the following steps:
Review your financial situation and determine if bankruptcy is the best option.
Consult with a legal professional to understand your rights and obligations.
Explore US Legal Forms for templates that can assist you in filing necessary documents.
Find the legal form that fits your case
Browse our library of 85,000+ state-specific legal templates.
It must be a single property that generates substantially all of the debtor's income and does not involve significant business activities beyond operating the property.
No, residential properties with fewer than four units do not qualify.
Creditors may seek relief from the automatic stay if specific conditions are not met by the debtor.