Statutory Requirements to Invervene in a Forfeiture Proceeding

The statutory requirements to intervene in the forfeiture proceeding require one of two conditions must adhere for an intervenor to receive relief. The intervenor must either:

1. have an interest in the property that is superior to the criminal defendant’s because it arose prior to “the time of the commission of the acts [that] gave rise to the forfeiture,” 21 U.S.C. § 853(n)(6)(A); or
2. be a “bona fide purchaser for value” of the property who was “reasonably without cause to believe that the property was subject to forfeiture” at the time of purchase. Id. § 853(n)(6)(B).

Bona Fide Purchaser for Value of the Property

When determining whether the Petitioner is a “bona fide purchaser for value,” the District Court will look at the laws of the state in which the property was purchased. For example, in United States v. Harris, 246 F.3d 566, 571 (6th Cir. 2001), the court found that whether a petitioner is a bona fide purchaser is a question appropriately determined by reference to state law.

The creation of the petitioner’s property interest is determined through an examination of applicable state law, however, the “effect of that property interest—i.e., whether it satisfies the requirements of the federal forfeiture statute—is necessarily a matter of federal law.” United States v. Speed Joyeros, S.A., 410 F. Supp. 2d 121, 125 (E.D.N.Y. 2006).

To be a bona fide purchaser, a party “must have no knowledge of the outstanding lien and win the race to the recording office.” Jenkins v. Stephenson, 745 N.Y.S.2d 30, 32, 293 A.D.2d 612, 614 (2d Dep’t 2002) (internal quotation marks omitted). For the first prong, the court will decide whether the Petitioner knew about the government’s interest in the Premises through either:

• constructive notice; or
• actual notice.

The statute giving the petitioner relief as to their vested or superior interest at the time of the commission of the act giving rise to the forfeiture of the subject property “works hand in hand with the ‘relation-back’ doctrine embodied in § 853(c), which provides that all property subject to forfeiture based on a criminal offense ‘vests in the United States upon the commission of the [offense].'” United States v. Watts, 786 F.3d 152, 166 (2d Cir. 2015) (quoting Section 853(c)). The superior interest might take the form of a senior “lien, mortgage, recorded security device, constructive trust, valid assignment, or the like.” See United States v. Campos, 859 F.2d 1233, 1239 (6th Cir. 1988).

Second, the court will consider whether the Petitioner won the race to the recording office. For example, the Court will look at when the deed on real property was filed.

The Advisory Committee explained that because ancillary proceedings can be complicated, “procedures akin to those available under the Federal Rules of Civil Procedure,” such as motions to dismiss, discovery, and motions for summary judgment, “should be available to the court and the parties to aid in the efficient resolution of the claims.” Fed. R. Crim. P. 32.2 advisory committee’s note to subdivision (c).

Under Rule 32.2, a motion to dismiss a third-party petition in a forfeiture proceeding prior to discovery or a hearing should be treated like a motion to dismiss a civil complaint under Federal Rule of Civil Procedure 12(b). See Fed. R. Crim. P. 32.2 advisory committee’s note to subdivision (c).

After some discovery has taken place, either the government or Third Party Petitioner might move for summary judgment. If the government moves for summary judgment after some discovey has taken place, the petitioner would be required to produce evidence supporting a prima facie case of entitlement.

When ruling on the motion to dismiss, the court will treat the assetions in the petition as true. See Fed. R. Crim. P. 32.2(c)(1)(A). The court will grant the motion to dismiss “only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 152 L. Ed. 2d 1, 122 S. Ct. 992 (2002) (quoting Hishon v. King & Spalding, 467 U.S. 69, 73, 81 L. Ed. 2d 59, 104 S. Ct. 2229 (1984)).

Partial Forfeitures of Real Property in Criminal Forfeiture

The plain language of the criminal forfeiture statute does not expressly preclude partial forfeitures. Instead, it provides that anyone convicted of certain offenses “shall forfeit to the United States . . . any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of such violation,” 21 U.S.C. § 853(a) & (1).

The criminal forfeiture statute further defines “property” to include “real property, including things growing on, affixed to, and found in land,” id. § 853(b)(1), as well as “tangible and intangible personal property, including rights, privileges, interests, claims, and securities,” id. § 853(b)(2).

The term property thus encompasses both real property itself as well as “interests” and “claims,” which presumably include, interests in or claims to real property. “It is unclear, where real property is involved, whether the statute compels forfeiture of a specific parcel of real property as opposed to an interest in that parcel.” Pacheco v. Serendensky, 393 F.3d 348, 354, (2d Cir. 2004).

In Pacheco v. Serendensky, 393 F.3d 348, 354, (2d Cir. 2004), the court noted:

In view of this ambiguity, we note that reading the criminal forfeiture statute to prohibit partial forfeitures raises serious constitutional concerns. If partial forfeitures are forbidden, then a criminal’s activity may result in the forfeiture of an innocent third party’s interest in property.

The government’s acquisition of an entire tract of real property in forfeiture proceedings may thus constitute an unconstitutional taking of a third party’s interest or a deprivation of that party’s property without due process, in violation of the Fifth Amendment. See U.S. Const. amend. V; see also United States v. Totaro, 345 F.3d 989, 999 (8th Cir. 2003) (“If this court were to deem forfeited the entire estate despite a valid claim of partial ownership by a third party, . . . it would . . . punish the third party, against whom no jury has returned a verdict of guilt, and may therefore raise constitutional questions of a whole different order.”) (citation omitted); United States v. One 1976 Chevrolet Corvette, 477 F. Supp. 32, 35 (E.D. Pa. 1979) (holding that operation of forfeiture statute against bona fide purchaser violates Fifth Amendment). Cf. Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 679-80, 40 L. Ed. 2d 452, 94 S. Ct. 2080 & 689-90, 40 L. Ed. 2d 452 (1974).

The canons of construction, however, require us to construe statutes in such a way as to avoid raising such constitutional concerns. See INS v. St. Cyr, 533 U.S. 289, 299-300, 150 L. Ed. 2d 347, 121 S. Ct. 2271 (2001).

We also note that courts have consistently construed the civil forfeiture statute, 21 U.S.C. § 881, to permit partial takings. See, e.g., United States v. One Lincoln Navigator 1998, 328 F.3d 1011, 1015 (8th Cir. 2003); United States v. 198 Training Field Rd., 2004 U.S. Dist. LEXIS 10743, 2004 WL 1305875, at *2-3 (D. Mass. June 14, 2004); United States v. Real Property Located at Incline Village, 976 F. Supp. 1327, 1342-43 (D. Nev. 1997).

Although we recognize that the criminal and civil forfeiture provisions are not identical, see United States v. $ 359,500 in United States Currency, 828 F.2d 930, 933 (2d Cir. 1987); United States v. $ 2,500 in United States Currency, 689 F.2d 10, 15-16 (2d Cir. 1982), we join those circuits that have recognized Congress’ intention to vest in the government the same substantive rights under the two statutes, notwithstanding their technical differences. See United States v. Littlefield, 821 F.2d 1365, 1367 (9th Cir. 1987); see also United States v. Smith, 966 F.2d 1045, 1053-54 (6th Cir. 1992).

In light of the constitutional-avoidance canon and the parallel construction of the criminal and civil forfeiture statutes, we agree with those courts that have suggested that the criminal forfeiture statute, 21 U.S.C. § 853, permits partial forfeitures of real property. See Totaro, 345 F.3d at 999; United States v. O’Dell, 247 F.3d 655, 680 (6th Cir. 2001); United States v. Kennedy, 201 F.3d 1324, 1329 (11th Cir. 2000); Lavin, 942 F.2d at 185; United States v. Certain Real Property Located at 2525 Leroy Lane, West Bloomfield, Michigan, 910 F.2d 343, 350-51 (6th Cir. 1990). Although none of those courts explicitly held that the criminal forfeiture statute permits partial forfeitures, we do so now.

No other result seems reasonable. Although partial forfeitures may occasionally make for strange bedfellows — such as making the government co-owners of real property with the spouse of a criminal defendant — the alternative could give the government an undeserved windfall and deny an innocent third party her valid property interest.

The purposes of the forfeiture penalty are to punish, deter and disempower criminals, see United States v. Morgan, 224 F.3d 339, 343 (4th Cir. 2000); United States v. Rogers, 102 F.3d 641, 648 (1st Cir. 1996), aims which are not furthered by taking an innocent owner’s share. Indeed, we fail to see either how any legitimate interest could be furthered by reading the statute to forbid partial forfeitures or how Congress could have intended to forbid them.

Id. at 354-355.

As such, the third party must allege in the petition that they were a “bona fide purchaser for value” of that interest and was “reasonably without cause to believe that the property [i.e., the Defendant’s interest] was subject to forfeiture” at the time of purchase, id. § 853(n)(6)(B).

For example, the Petitioner might allege they were a bona fide purchaser because they had “no knowledge of the outstanding lien” against the unforfeited interest in the property “and [won] the race to the recording office.” Jenkins v. Stephenson, 745 N.Y.S.2d 30, 32, 293 A.D.2d 612, 614 (2d Dep’t 2002).

In United States v. Rodriguez-Perez, 2019 U.S. Dist. LEXIS 6413, *15-16, the New York Southern District Court reasoned:

Interpreting this statute to allow the Government to extinguish a pre-existing lien interest held by an innocent third-party that was never part of the property interest held by the criminal defendant raises constitutional takings issues that a court should seek to avoid in interpreting any ambiguity in the statute. See Pacheco v. Serendensky, 393 F.3d 348, 354-55 (2d Cir. 2004) (resolving any ambiguity as to whether the property to be forfeited included the entire parcel or merely a defendant’s interest therein so as to permit the partial forfeiture of real property, in part, to avoid deciding whether allowing a criminal defendant to forfeit the entire fee simple interest would deprive the successor of an innocent joint tenant (by foreclosure) of her property rights would constitute an unconstitutional taking); see also United States v. Sec. Indus. Bank, 459 U.S. 70, 75-78, 103 S. Ct. 407, 74 L. Ed. 2d 235 (1982) (interpreting an ambiguous provision of the Bankruptcy Code to apply only prospectively in order to avoid the destruction of pre-existing liens and eliminating the need to consider the statute’s constitutionality under the Takings Clause); cf. United States v. Schwimmer, 968 F.2d 1570, 1581 (2d Cir. 1992) (stating that in enacting 18 U.S.C. sections 1963(l)(6)(A) and (B), which are directly analogous to 21 U.S.C. Sections 853(n)(6)(A) and (B), Congress intended that permitting petitioners to assert vested or superior property interests would “cover those cases where the Court lacks jurisdiction over the property because it is not really property of the defendant”).

This article was last updated on Friday, September 12, 2025.