Fifth Circuit decision issued in 1980 in which the court ruled that a purchaser at a real estate foreclosure sale conducted under Texas law was liable for a fraudulent transfer.
The purchaser, who was a third party bidder and not the secured lender, was found to be in receipt of a fraudulent transfer when it bid $115,400 at the sale and received title to property that the court later determined had a fair market value of $200,000. In so holding, the court stated that it could find no prior fraudulent transfer decisions that upheld a sale of real property for less than 70 percent of fair market value, prompting many lenders and lawyers to adopt the percentage as a benchmark in devising foreclosure bidding strategies.
Durrett met its demise in the U.S. Supreme Court’s BFP decision, where the court held that the price received at a regularly conducted, noncollusive foreclosure sale conclusively establishes reasonably equivalent value.
See also BFP Case, Constructively Fraudulent Transfer, Regularly Conducted Foreclosure Sale.