The New York Structured Settlement Protection Act, New York General Obligations Law §§ 5-1701 to 5-1709, provides that a transfer of structured settlement payment rights is not effective without court approval, and must meet other statutory requirements, such as that the payee must receive a disclosure statement with important financial and other information.
One of the additional requirements is that the petitioning factoring company must provide the court with proof of delivery of the disclosure statement to the payee.
New York trial courts, presented with a petition that does not include such proof, have denied requests for approval of transfers of structured settlement payment rights, because the court could not find that the statutory requirements have been met.
One such case is In the Matter of Apis Management, LLC d/b/a Fairfield Funding (Perrien), Index No. 700733/14, Supreme Court, Queens County, N.Y. (N.Y. Sup. Ct. Sept. 2014) (Butler, J.S.C.).
Regarding the lack of proof of delivery of the disclosure statement, the court said the following:
Pursuant to section 5-1703 of the General Obligations Law petitioner is required to provide the disclosure statement, by first class mail and certified mail, return receipt requested not less than 10 days prior to the date of the transfer agreement. Petitioner failed to provide proof of service of the disclosure statement, additionally, the disclosure statement is undated and the provision of the Transfer Agreement, executed by Ms. Perrin on January 20, 2014, which acknowledges that the disclosure statement was provided in accordance with applicable law[,] is insufficient to demonstrate compliance with GOL 5-1703.
In the Matter of Apis Management, LLC d/b/a Fairfield Funding (Perrien), Index No. 700733/14, Supreme Court, Queens County, N.Y. (N.Y. Sup. Ct. Sept. 2014) (Butler, J.S.C.).
The court’s decision was based on the lack of proof of delivery; the court also noted that “although the Transfer Agreement includes a representation by Ms. Perrien that the transferred payments are not her primary source of income and are not intended to be used for medical expenses or treatments, the affidavit in support of the proposed transfer, exdecuted by Ms. Perrien on January 20, 2014, states that the funds will be used to pay for knee surgery and there is no statement with respect [to] Ms. Perrien’s primary source of income.”