On October 17, 2022, Justice Crane of the New York County Commercial Division issued a decision in 214 Knickerbocker LLC v. Shou Pan, 2022 NY Slip Op. 33579(U), granting summary judgment on a DCL 273 claim based on the lack of fair consideration for a transfer, explaining:
Pursuant to DCL § 273, a conveyance that renders the conveyor insolvent is fraudulent as to creditors without regard to actual intent, if the conveyance was made without fair consideration. Additionally, there is a rebuttable presumption of insolvency where there is a lack of adequate consideration.
Here, Plaintiff has established prima facie entitlement to summary judgment on its DCL § 273 claim by demonstrating that the Parents transferred their combined 50% interest in the Smart Street Property to the Sons for inadequate consideration, creating the presumption of insolvency. The October 26, 2007 deed shows that the Parents and Sons together purchased the Smart Street Property for $688,888.00. On January 8, 2019, according to the Bargain and Sale Deed, the Parents transferred their interest in the Smart Street Property to the Sons for ten dollars. The enormous difference between the purchase price in 2007
and the transfer price in 2019, and the close familial relationship of the Defendants, establishes that the Parents did not convey the property for fair consideration in good faith pursuant to DCL § 272.In opposition, Defendants have failed to rebut the presumption of insolvency or raise a triable issue of material fact. It is irrelevant that the Sons purportedly paid the Smart Street Property mortgage and other expenses, and that the Sons allegedly maintained and managed the Smart Street Property before and after the transfer. Although the satisfaction of an antecedent debt may constitute fair consideration for a transfer of property, that general principle is subject to certain conditions. In order for the satisfaction of the antecedent debt to constitute fair consideration for a transfer of property, there must be a fair equivalency between the value of the antecedent debt deemed to be satisfied and the value of the property transferred, and the transfer must have been made in good faith.
Further, past consideration cannot support an agreement unless the past consideration is explicitly recited in a writing without any need to refer to extrinsic evidence. Defendants’ self-serving assertions in their affidavits are insufficient to raise a triable issue of fact. Specifically, Defendants’ evidence in opposition does not tend to establish either that the Sons were the Parents’ creditors or that the Smart Street conveyance satisfied a legitimate antecedent debt. The Bargain and Sale Deed establishes only that the Parents transferred the Smart Street Property to their children for ten dollars, which is not adequate consideration under these circumstances.
(Internal quotations and citations omitted).