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19. Non-subordination of property tax liens to family support claims
Section 724(b) is amended to limit the authorization of a Chapter 7 trustee to pay priority claims from funds that would otherwise be used to satisfy a property tax lien (and subordinate the tax lien to other liens on the affected property). Except for wage and employee benefit priority claims, this subordination is made inapplicable to perfected ad valorem property taxes, the situation in which it most commonly arises. Moreover, even for wage and benefit priorities, and even as to liens arising from property tax assessed other than on the value of the property, subordination would be allowed under new § 724(e) only after the trustee had exhausted the unencumbered assets of the estate-including § 506(c) recoveries from holders of secured claims. Thus, in contrast to the prior law, if a debtor owes both ad valorem property taxes secured by a lien on the debtor’s property and support obligations, the proceeds property taxes secured by a lien on the debtor’s property and support obligations, the proceeds of any sale of the property will now be used to pay the taxes before the support obligations.
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