On June 6, 2023, the First Department issued a decision in 214 Knickerbocker LLC v. Shou Pan, 2023 NY Slip Op. 02959, holding that the transfer of property from parents to children without evidence of proper consideration supported fraudulent transfer claim, explaining:
Defendants Shou Pan and Feng Chen (the parents) and defendants Yu Zhao Pan and Yu Xing Pan (the sons) acquired the Smart Street property together and held it as tenants with a right of survivorship for about 12 years. Within a week after plaintiff commenced an action against the parents seeking up to $5 million in damages, defendants transferred the Smart Street property to the sons for nominal consideration.
Plaintiff established prima facie that the conveyance of the parents’ interest in the Smart Street property to the sons without fair consideration was a fraudulent conveyance. In opposition, defendants failed to submit evidence sufficient to raise an issue of fact as to whether the conveyance of the parents’ interests in the property was in exchange for fair consideration consisting of antecedent debt. While defendants averred that one of the sons was obligated for and had in the past paid the mortgage on the property, these averments were insufficient because defendants failed to offer any evidence that the alleged past consideration was explicitly recited in a writing.
Plaintiff also established entitlement to summary judgment on its Debtor and Creditor Law § 276 claim through evidence that there were badges of fraud supporting an inference of intent to defraud, including the intrafamilial nature of the transfer, the inadequacy of the consideration, and the continued benefit derived from the property by the parents after the conveyance. Contrary to defendants’ contention, plaintiff was not required to show that defendants were aware of plaintiff’s claims at the time of the conveyance. Thus, defendants’ argument that they were unaware of plaintiff’s claims at the time of the transfer was insufficient to raise a triable issue of fact.
(Internal quotations and citations omitted).