Badges of fraud you can read off the record

Listen instead

The same material, read aloud and told more loosely than it is written. Nothing is said in it that this page does not also say.

The badges in the statute

A transfer made with actual intent to hinder, delay or defraud any creditor is reachable, and intent is the hard part. The statutes meet that difficulty with a list.

In Florida a transfer is fraudulent as to a creditor if the debtor made it with actual intent to hinder, delay or defraud any creditor, whether the claim arose before or after the transfer. Fla. Stat. 726.105¹ says so. New York reaches the same transfer with the same words, calling it voidable. DCL 273(a)² is the section.

Because intent is rarely written down, both acts list factors a court may consider in deciding it, among others. The first five: the transfer was to an insider; the debtor kept possession or control after it; it was concealed; the debtor had been sued or threatened with suit before it; it was of substantially all the debtor's assets. The other six: the debtor absconded; removed or concealed assets; got less than reasonably equivalent value; was insolvent at the time or soon after; made the transfer shortly before or after a substantial debt; or moved essential business assets to a lienor who passed them to an insider. Fla. Stat. 726.105 lists all eleven, DCL 273(b) lists the same eleven.

The voidable-transfer acts of the other states in this series carry a list of the same kind. Pennsylvania at 12 Pa.C.S. 5104(b)³ and California at Cal. Civ. Code 3439.04(b)⁴ track the uniform eleven-factor text. Texas tracks the same eleven at Tex. Bus. & Com. Code 24.005(b), though its concealment factor reads only that the transfer or obligation was concealed, without the 'disclosed or' the other states carry. Indiana is the odd one out at IC 32-18-2-14(b)⁵: nine factors, with no insider factor and no essential-business-assets factor. South Carolina's version at S.C. Code 27-23-10(B)⁶ is narrower still, raising a presumption only for a child support debtor.

These are factors to weigh, not elements to tick. A court may consider them, among other factors, and the statutes name no number that proves intent. In New York the creditor still carries the claim by a preponderance of the evidence. DCL 273(c) puts that burden squarely on the creditor.

Which ones a deed can show

A deed names the parties and records what was paid for the stamps. It does not state how the parties are related, and that distinction decides how far the record carries.

A Florida deed cannot be recorded unless the printed name and post-office address of each person who signed it, and of each grantee, appear on it. Fla. Stat. 695.26(1)(a)⁷ requires the signers' names and addresses, and 695.26(1)(f) the grantee's. Those names stay on the index absent a court order. A Florida recorder may not strip grantor or grantee names from the Official Records on the strength of a public records exemption, and where a name contains a protected street address the recorder removes only that street address portion. Fla. Stat. 28.2221(2)(b)⁸ says so.

So the deed and the record around it bear on four of the eleven factors: who took it, what was paid for it, when it happened, and, through the tax roll, who still gets the bills. That mapping is a reading of the list against what records carry, not a rule the statute states. Broward's property appraiser changes its ownership records from recorded deeds, and says plainly that it has no authority to decide whether a deed is fraudulent. That decision belongs to a court, not a clerk.

The insider factor is where the deed stops short. An insider of an individual debtor includes a relative, a partnership in which the debtor is a general partner, and a corporation of which the debtor is a director, officer or person in control. Fla. Stat. 726.102(8)(a)⁹ sets that out, DCL 270(h)(1)¹⁰ matches it. A relative reaches to the third degree by consanguinity. It also reaches a spouse, and a spouse's relatives within that degree, adoptions included. Fla. Stat. 726.102(13) defines it, DCL 270(n) the same. A deed names people. It does not say how they are related. A shared surname is a reason to look, not a finding.

Some transfer forms do ask. Indiana's sales disclosure form must show any family or business relationship between transferor and transferee under IC 6-1.1-5.5-5¹¹, and Illinois's declaration asks whether the transfer is between related individuals or corporate affiliates under 35 ILCS 200/31-25(h)¹². Where a form carries that line, the insider question stops being a guess from a surname.

Price, insider, timing, the address that never changed

Four factors leave a trail a reader can follow. The trail points; it does not conclude.

Price first. Outside Miami-Dade, Florida's documentary stamp tax on a deed is 70 cents per hundred dollars of consideration, so the stamps carry the price. The Department of Revenue states the rate and that the tax is computed on the consideration for the transfer. A mortgage on the property counts: its balance at the time of transfer is consideration. And a gift of unencumbered property with nominal consideration on the deed produces 70 cents of tax in the Department's own worked example of a parent deeding a million-dollar house to her children for 'love and affection and $1'. In that example, 70 cents of stamps marks a deed that recited a nominal price. It bears on the reasonably-equivalent-value factor. It does not settle it. Indiana's form goes further and states the total price actually paid, under IC 6-1.1-5.5-5. There is more on this reading in doc stamps give the real price.

Timing next. For land, both acts treat a transfer as made when it is perfected against a good-faith purchaser from the debtor. Fla. Stat. 726.107(1)(a)¹³ fixes that moment, DCL 275(a)(1)¹⁴ matches it. Set that date against the date suit was filed and the dates the debt arose, because two of the factors turn on exactly that order. Florida also shifts a burden in a narrow slice: where, within 1 year before service of process in the original action, the debtor held title to or paid for personal property now claimed by a spouse, relative or confidant, the debtor must prove the transfer was not made to defraud creditors. Fla. Stat. 56.29(3)(a)¹⁵ does that, and it is about personal property, not land.

Then the address. One factor is whether the debtor kept possession or control after the transfer. Some transfer forms carry the address where tax bills go: Indiana's lists it as an item under IC 6-1.1-5.5-5, and Maryland's intake sheet must state a tax bill mailing address for an ownership change under Md. Code, Real Prop. 3-104(g)(3)(vii)¹⁶. On Broward's roll a percent sign before a name means 'in care of': that person receives the mail and is not an owner. A tax bill that still goes to the debtor's address after the deed points at possession or control. Nothing in the statutes makes it proof.

What still needs discovery

The factors that matter most are the ones a register was never built to hold. For those there is the fact information sheet and the subpoena.

Insolvency is a factor, and the record cannot show it. A debtor is insolvent when debts exceed assets at a fair valuation, and presumed insolvent when generally not paying debts as they come due. Fla. Stat. 726.103¹⁷ states both, DCL 271¹⁸ the same. Concealment, absconding and removal of assets turn on facts that no deed carries. Those are the factors that have to be pulled out of the debtor.

Florida gives a tool for that. At the creditor's request the court must order the debtor to complete the fact information sheet within 45 days under Fla. R. Civ. P. 1.560(b)¹⁹, and Form 1.977 asks whether the debtor gave, sold, loaned or transferred property worth more than $100 to anyone in the last year, with the name and address of whoever received it. A witness in Florida proceedings supplementary is not excused from answering because the answer would show fraud or knowledge of a transfer. Fla. Stat. 56.29(5) removes that excuse. And those same proceedings can hear chapter 726 claims and enter a money judgment against a transferee, under Fla. Stat. 56.29(9), whether or not the transferee still holds the property.

New York runs the inquiry through the subpoena. The creditor may compel disclosure of all matter relevant to satisfying the judgment under CPLR 5223²⁰, by deposition, document subpoena or information subpoena under CPLR 5224²¹. For how long the window stays open to reach a transfer, see transfers after a judgment.

There is a defense the record does not defeat. A transfer is not voidable for actual intent against a person who took in good faith and for reasonably equivalent value. Fla. Stat. 726.109(1)²² protects that transferee, DCL 277(a)²³ the same. A badge read off the record does not survive that defense on its own. If the creditor wins and holds a judgment, the court may order execution levied on the asset transferred or its proceeds, under Fla. Stat. 726.108(2)²⁴ and DCL 276(b)²⁵. The record can show which date to ask about and what the stamps recited. It cannot show the debtor's mind.