Enforcement of Judgment
When Defendant Transfers Title to His Spouse As Her Sole And Separate Property, What Can You Do?
Posted by: Kenny Tan
September 04, 2011
When you make the decision to sue someone for civil wrong, you hope to obtain a judgment that you can collect on. What would be the point of getting a judgment against someone who's judgment proof?
When someone is being sued or threatened with a lawsuit where the risk of liability is high, the first thing he thinks about is "how do I protect my assets?"
The temptation to transfer title to his properties, especially real properties, to someone else's name is high. But it may be naive to think that that's going to prevent creditors from coming after it later in time.
If you obtain a money judgment against a married person, for instance, practically all properties that he acquired during the marriage are community properties subject to enforcement of judgment. For example, if the property has equity and you have obtained money judgment, you may apply to the court to order the property be sold to satisfy the judgment.
Whenever someone transfers a property to put if out of the reach of creditors, that transfer may be set aside as a fraudulent conveyance.
So if the husband signs a deed to quitclaim a property owned and held under the names of himself and his wife and his wife as a "sole and separate property", for no consideration, that transfer is probably a fraudulent conveyance and can be set aside as such.
Setting aside a fraudulent conveyance is a legal remedy available under the Uniform Fraudulent Transfer Act (UFTA). It simply means that the law treats the transfer as void so the creditors may enforce the money judgment against it. You can even record a lis pendens against a property which is the subject of a fraudulent transfer.
Now even if the wife has immediately turned around and sold the property to a bona fide purchaser, it doesn't mean the husband and wife are off the hook. Creditors can still sue them for damages which they've caused by putting out of their reach. The court may in its discretion order a judgment against the wife for the amount the husband owes on the judgment. Also, punitive damages are available to the creditors if the fraudulent conveyance has been proven by clear and convincing evidence.
