Florida’s Uniform Fraudulent Transfer Act

A debtor is a person who owes a debt to a creditor.  On the contrary, a creditor is a person who lends money to a debtor for a set period of time with the intent of being repaid.  In a typical debtor-creditor relationship, the debtor borrows money for a fixed period of time and gradually pays back the creditor.  In the event of non-payment, the creditor can usually recover damages in court.

Sometimes the creditor can “attach” to real or personal property and upon non-payment, the creditor can seize the property.  This is called “execution”.  Execution is a collection remedy that courts grant creditors if the debtor does not repay the debt.

Florida’s Uniform Fraudulent Transfer Act

Debtors will sometimes attempt to hide assets from creditors by giving assets away to third parties.  A fraudulent transfer occurs when the debtor conveys title of his or her real or personal property to a third party with intent to hinder a creditor from collecting.  Under Florida’s Uniform Fraudulent Transfer Act (FUFTA), creditors can sue to overturn a fraudulent transfer; however, not all transfers made to third parties are fraudulent and subject to reversal.  Specifically, a creditor may be able to overturn a transfer if the intent of the transfer is to hinder a creditor.  Consequently, FUFTA does not prevent proper asset protection.

Courts have addressed factors that aid in determining the intent of the transfer.  In short, these factors include:

  • Transfers to family members
  • Concealment
  • Insolvency
  • Control over property transferred

Although courts use these factors, these factors are not exhaustive.  Similarly, even if one or more of these factors are present, the court may not recognize the transfer as fraudulent against creditors.

FUFTA is a powerful remedy for creditors.  Likewise, the typical remedies under FUFTA include injunction, execution, attachment, and avoidance.  To read more about creditor’s remedies under FUFTA click here.

If you are a creditor and have questions about fraudulent transfers please contact us.  Our experienced attorneys look forward to assisting you.

 

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