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digest 17 - sale to parents
I agree with Dennis... the Courts, especially the Circuit courts have
settled the issues concerning foreclosure sales as determining a
reasonably equivalent value and therefore that even if lower than the
borrower's anticipated price... nevertheless not a fraudulent
conveyance.... however, would it be a fraudulent conveyance if on the
eve of a foreclosure the debtor gives his parents a quit claim upon
which they refinance and pay off all of the outstanding liens and
encumbrances against the property?
Lou Esbin
Sent: Tuesday, March 30, 2004 8:07 PM
To: cdcbaa@yahoogroups.com
Subject: [cdcbaa] digest 17 - sale to parents
There is a line of cases which were argued in the 80's, I believe
one of the cases had a name like Duret...., anyway, the line of
cases concerned suing mortgage companies for forclosing on
properties when the properties had a lot of equity, calling it a
fraudulent conveyance (Madrid was another of the cases).
The first few Circuit level cases held selling for 70% of value was
never a fraudulent conveyance, but selling for less was a fraudulent
conveyance. Later, courts came around to the view the sale at a
foreclosure set the market value and could not be attacked at all
(absent bidding fraud, etc.). These 70% cases are still good law
for percent of value blocking a fraudulent conveyance attack.
Take a look at them. Your facts seem to fit. The idea is when a
person is in trouble, the person may have to sell for less than full
fair market value. This being the case, courts cannot set aside all
sales below highest and best price as fraud.
dennis
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