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Fraudulent Transfer Act

Often, individuals transferring properties or assets come across the Fraudulent Transfer Act. Not knowing if their transfer is going to be deemed fraudulent or what would make their transfer fraudulent often leads to questions like the ones answered below.

What is the Uniform Fraudulent Transfer Act?

The Uniform Fraudulent Transfer Act was adopted in California for all transfers and obligations occurring on or after January 1, 1987. This act supplies solutions to unsecured creditors against debtors who have made transfers that would have placed possessions beyond the reach of their creditors.

According to Cal.Civ Code 3439.04:

The court will use all relevant evidence to determine if there has been a fraudulent transfer including:
1. “the transfer was to an insider”
2. “the debtor had retained possession or control of the property transferred,”
3. “the transfer or obligation was disclosed or concealed,”
4. “the debtor was sued or threatened with suit before the transfer was made or the obligation incurred,”
5. “the transfer was of substantially all the debtor’s assets,”
6. “the debtor has absconded,”
7. “the debtor had removed or concealed assets,”
8. “the value of consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred,”
9. “the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation incurred,”
10. “the transfer had occurred shortly before or shortly after a substantial debt was incurred,” or
11. “the debtor had transferred the essential assets of the business to a lien or who had transferred the assets to an insider of the debtor.”

Can I sell my home to my parents while it is in foreclosure?

Your lender would not have a problem with the sale to your parents as long as you pay off the loan and get out of the threat of foreclosure. However, selling you house for less than fair market value can make a case for other creditors to have the sale set aside under the Uniform Fraudulent Transfer Act.

I have a complex deficiency judgment getting ready to hit me on a storage facility they just foreclosed on. I own a property in the Bahamas free and clear along with airplane. Can I transfer any of my properties without them being considered a fraudulent transfer?

When a court judgment has been given, any transfers within 2 years can be recovered under the Fraudulent Transfer Act. However, the properties that you may have in foreign countries essentially are protected because the property is out of the jurisdiction of the courts.

I have a judgment against an individual. I have been issued a writ of execution to sell his home to pay my judgment. What can I do if he tries to quit claim the property?

If the individual tries to transfer the property before the writ of execution, then it would possibly stop the sale because of the transfer of title. This of course may be a temporary occurrence. You would be entitled to sue the person under the Fraudulent Transfer Act and have the transfer reversed. Then you could continue with the writ of execution.

Knowing the correct information regarding the Fraudulent Transfer Act will help when you are faced with circumstances that involve transfers that creditors may be able to have reversed. Experts can help answer questions about the Fraudulent Transfer Act or what types of transfers may be considered fraudulent. Get the answers fast and affordably by asking an Expert.
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