When a debtor transfers assets to family, friends, or shell entities to avoid paying your judgment, California's Uniform Voidable Transactions Act (UVTA) lets you unwind those transfers and recover the assets. Here's how fraudulent transfer claims work.
A fraudulent transfer (now called a "voidable transaction" under California law) occurs when a debtor transfers assets with the intent to hinder, delay, or defraud creditors - or makes a transfer for less than fair value while insolvent.
Under Civil Code 3439.04, you can void a transfer if:
The debtor sees the lawsuit coming (or loses), then suddenly transfers real estate or business interests to a spouse, family member, or newly-formed LLC for little or no money. Classic fraudulent transfer.
Courts look for these suspicious indicators under Civil Code 3439.04(b):
Courts look at the totality of circumstances. Multiple badges of fraud together create a strong inference of fraudulent intent. Even two or three badges may be enough to shift the burden to the debtor to explain the legitimate purpose of the transfer.
Time limits for fraudulent transfer claims under Civil Code 3439.09:
If your claim arose before the transfer, you can look back up to 7 years for actual fraud claims under certain circumstances.
Once you discover a suspicious transfer, don't wait. The 1-year discovery deadline runs from when you reasonably could have discovered it - not when you actually did. Start investigating transfers as soon as you have a judgment.
A fraudulent transfer claim requires filing a new lawsuit (or adding it to your existing case).
Under Civil Code 3439.07, remedies include:
If the fraudulent transfer involved real property, immediately record a lis pendens (notice of pending action) to prevent the transferee from selling to a bona fide purchaser. A good faith buyer for value can defeat your claim.
The transferee may assert these defenses:
If the transferee paid fair market value in good faith without knowledge of the fraud, they keep the asset. This is why lis pendens is important - it gives constructive notice that defeats good faith.
If the debtor received fair value in exchange (not just "some" value, but reasonable equivalence), the transfer isn't voidable as constructive fraud.
The debtor can try to explain innocent reasons for the transfer, but must overcome the inference created by badges of fraud.
If the transfer occurred more than 4 years ago and you didn't discover it within 1 year of when you reasonably could have, the claim may be time-barred.
Yes, in some circumstances. Under Civil Code 3439.07(a)(3), the court may award attorney's fees if the debtor acted with actual intent to defraud. Constructive fraud (insolvency-based) claims typically don't support fee awards. The fees are against the debtor, not necessarily the transferee.
You can pursue the transferee for the value received from the sale. If the subsequent buyer was a good faith purchaser for value, you can't recover the asset from them, but you can recover its value from the initial transferee who received it fraudulently.
The bankruptcy trustee has even broader powers to avoid fraudulent transfers under federal bankruptcy law (11 USC 548) with a 2-year lookback. State law claims with longer lookbacks can be brought by the trustee as well. If the debtor files bankruptcy, the trustee may pursue your fraudulent transfer claim - which benefits all creditors, not just you.
California adopted the Uniform Voidable Transactions Act (UVTA) in 2016, replacing the older Uniform Fraudulent Transfer Act (UFTA). The main change was terminology - "fraudulent transfer" became "voidable transaction." Substantively, the laws are nearly identical. Old cases under UFTA still apply.
Yes. If community property was transferred without adequate consideration, you can pursue it. Transmutations (converting community property to separate property) shortly before or after incurring debt are common fraudulent transfer scenarios. The spouse may be liable as a transferee even if they weren't directly involved in your underlying dispute with the debtor.
I investigate suspicious asset transfers and pursue fraudulent transfer claims to recover hidden assets and hold debtors accountable for their schemes.