Fraudulent Transfer Law and Legal Definition

Fraudulent transfer means the illegal transfer of property with the intention to defraud the creditors. To constitute a fraudulent transfer their must be an intention to handicap the creditor from his just and lawful entitlements. Thus a fraudulent transfer arises in a creditor debtor relationship. In a fraudulent transfer the property is put out of reach of the creditor so that a creditor is delayed from satisfying his debt. For example, when A transfers his property to B without relinquishing his/her ownership over the property with an intention to put the property out of reach of his/her creditor, then such transfer is called a fraudulent transfer. A fraudulent transfer gives rise to a civil cause of action. The court can set aside a fraudulent transfer at the request of the defrauded creditor. Fraudulent transfer is also known as fraudulent conveyance.