Fraudulent Conveyances (Memo 1)
Fraud and Fraudulent Conveyances
G.L.c. 109A, §9 provides that if a conveyance is fraudulent a creditor may, as against any personexcept a purchaser for fair consideration without knowledge of the fraud have the transaction set aside. Fair consideration is defined as being given when property is received in good faith to secure a debt (e.g., a mortgage) in an amount not disproportionately small compared with the value of the property. G.L.c 109A, §3. (A purchaser who has given less than fair consideration may, nonetheless, retain the property as security provided there is no actual fraudulent intent. See G.L.c. 109A, §9(2).) A mortgagee who falls within the parameters of the statute would be protected by its provisions. One that falls outside its ambit would not (and would not be covered under the policy either because of the creditors' rights exclusion).
In Yacobian v. Yacobian 24 Mass.App.Ct. 946, 508 N.E.2d 1389 (1987) the court said:
A spouse in circumstances where divorce proceedings are "imminent" may qualify as a creditor under c. 109A and may complain of conveyances designed to frustrate the right to alimony or assignment of property. * * * Marriage, alone, however, does not make a spouse a potential creditor under G.L. c. 109A, and divorce proceedings do not subject all transfers made during marriage to retrospective scrutiny under that statute.