Fraudulent Conveyances (Memo 2)
Fraud and Fraudulent Conveyances
Massachusetts General Laws, Chapter 109A, Section 9 provides that a purchaser who without actual fraudulent intent has given less than fair consideration for the conveyance or obligation may retain the property or obligation as security for repayment. Based on the foregoing (which is similar to federal bankruptcy law), when someone buys property or takes a mortgage on the same for less than its fair value, the transaction is assailable if the seller thereafter files for bankruptcy. In either instances, the buyer or mortgagee can retain the property a "security for repayment." This doesn't help the buyer too much, as he or she is looking to obtain the fee title. The mortgagee, however, who is permitted to "retain . . . the property for repayment" gets just what it bargained for, namely a secured position for reimbursement of the amount loaned.