FRAUDULENT TRANSFER

In Florida the collection of a debt is hard enough without having to overcome the challenge of chasing down assets that have been transferred by the debtor to another party, especially the spouse in order to hide the asset  (a fraudulent transfer).  Marcadis Singer has been successful in overcoming this challenge and a couple of recent Florida cases will certainly help us in the area of Fraudulent Transfers. Fraudulent transfer (or fraudulent conveyance) is an action taken by a debtor to avoid paying a debt by transferring money or interest to another person or company.

On October 26, 2015 Florida’s First District Court of Appeals upheld and reinforced the principal that the debtor bears the burden to show that their conveyance of interest or ownership to their spouse was not made to delay, hinder, or defraud creditors if  the transfer was made within 1 year before the service of process on him or her, defendant has had title to, or paid the purchase price of, any personal property to which the defendant’s spouse claims title and right of possession at the time of examination. The Court in this case emphasized that the Debtor must show that not only was the transfer not done for delay purposes but also hinder and defraud motivations.

RREF SNV-FL SSL, LLC. v. Shamrock Storage, LLC., 178 So. 3d 90 (Fla. 1st DCA 2015)

 

If the transfer was made with intent to hinder, delay or defraud creditors the statute of limitation extinguishes the action four (4) years after the transfer was made or the obligation was incurred, in the alternative, the statute says that a cause of action can be taken after four (4) years but must be within one (1) year after the transfer or the obligation was or could reasonably have been discovered by the claimant. In March 2016 the court specified at which point the one (1) year statute begins to run. The Court concluded that the “plain language of that clause requires that the one-year period begin on the date the transfer was or could reasonably have been discovered, not on the date that the fraudulent nature of the transfer was or could have been discovered.” It is up to creditors to act quickly to determine the nature of the transfer and seek legal recourse.

Nat’l Auto Serv. Centers, Inc. v. F/R 550, LLC, No. 2D14-3632, 2016 WL 1238265, at *5 (Fla. Dist. Ct. App. Mar. 30, 2016)

 

In January 2016, the Appellate Court in McCalla reversed the Trial Court and ruled that Florida Statute Section 726.108 authorizes awards of money damages. The statute authorizes such awards against both fraudulent transferor and transferee, jointly and severally. The Court went on to say that once judgment is obtained, the creditor may go after the assets transferred or proceeds from the assets transferred.

McCalla v. E.C. Kenyon Const. Co., 183 So. 3d 1192, 1194 (Fla. 1st DCA 2016).

 

A fraudulent transfer is a serious matter that needs to be handled expeditiously. Once learning of a fraudulent transfer the creditor should act quickly to best protect their interest. Contact Marcadis Singer P.A. for more information.

 

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