M.G.L. C. 209A – FRAUDULENT CONVEYANCES
On its adoption of the Uniform Fraudulent Conveyance Act, the Legislature gave creditors several options in the face of a debtor's fraudulent conveyance of assets. M.G.L. c. 209A. Section 8(a)(1) of the statute provides that a creditor may effectively set aside a conveyance against anyone, except for a good faith purchaser or a party claiming under such a purchaser. M.G.L c. 209A §§ 8 and 9. Section two of the statute provides broad definitions to be applied in application of its various provisions.
The statute applies to mortgagees, see e.g., Dondis v. Lash, 277 Mass. 477, 178 N.E. 388 (1931), Gerrish v. Mace, 75 Mass. 237 (1857), and it is at that juncture that the statute has its greatest impact on title matters. Specifically, where a lender can be shown to be a "...good faith purchaser for value...", that is, having taken a mortgage for full consideration, M.G.L. c. 209A § 3,and without an intent to defraud, Id., § 5, that lender will have the protection of the statute. Caselaw appurtenant to section 8 suggests that before a mortgage will be set aside as fraudulent, it must be shown that the mortgagee must have known or participated in the fraud. Harris v. Flynn, 272 Mass. 8, 171 N.E. 730 (1930), S. Samuels & Co. v. Charles E. Fogg Co., 258 Mass. 402, 155 N.E. 429 (1927). In such a case, the conveyance is considered a nullity. Gately v. Kappler, 209 Mass. 426, 95 N.E. 859 (1911).
Lastly, it should be noted that the A.L.T.A 1992 Lender's policy excepts fraudulent conveyance claims under the creditor's rights provisions. Also, because the caselaw requires a lender have participated in the fraud, Harris v. Flynn, 272 Mass. 8, 171 N.E. 730, the policy would theoretically exclude such a claim under § 3(a) of the exclusions, the "created or suffered by the insured" provision.