Fraudulent transfer in Texas — TUFTA, the badges of fraud, and a deadline that extinguishes

The Texas Uniform Fraudulent Transfer Act is the creditor's answer to a debtor who moves money and property out of reach. It lets a court undo the transfer — or enter judgment against the person who received it.

Two features matter most. Constructive fraud requires no bad intent: an insolvent debtor who transferred an asset without receiving reasonably equivalent value is caught whatever they were thinking. And the deadline extinguishes the claim rather than merely barring the remedy, which makes it function as a statute of repose.

What the claim is

Someone who owed you money moved assets — to a spouse, a relative, a new company — so you could not collect.

Where the right comes from

Statute — Business and Commerce Code chapter 24.

What a plaintiff has to prove

Actual fraud — § 24.005(a)(1)

A transfer made or an obligation incurred with actual intent to hinder, delay, or defraud any creditor.

Intent is proved circumstantially through the badges of fraud listed in § 24.005(b), including whether:

• the transfer was to an insider;
• the debtor retained possession or control after the transfer;
• the transfer was concealed;
• the debtor had been sued or threatened with suit before the transfer;
• the transfer was of substantially all the debtor's assets;
• the debtor absconded or removed or concealed assets;
• the value received was not reasonably equivalent;
• the debtor was insolvent or became insolvent shortly after; and
• the transfer occurred shortly before or after a substantial debt was incurred.

No single badge is decisive. Several together are how these cases are proved.

Constructive fraud — § 24.005(a)(2) and § 24.006

No intent required. A transfer is fraudulent as to a creditor if the debtor did not receive reasonably equivalent value and either:

• the debtor was engaged in or about to engage in a business or transaction for which its remaining assets were unreasonably small; or
• the debtor intended to incur, or believed it would incur, debts beyond its ability to pay; or, under § 24.006(a), the debtor was insolvent at the time or became insolvent as a result.

Insider preferences get their own rule: § 24.006(b) makes a transfer to an insider for an antecedent debt fraudulent where the debtor was insolvent and the insider had reasonable cause to believe it.

How long you have to file

Four years, under § 24.010(a) — and the language matters. A claim "is extinguished unless action is brought" within four years after the transfer was made or the obligation was incurred, or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant.

Texas courts treat that as an extinguishment provision, closer to a statute of repose than an ordinary limitations defense. A late claim does not merely fail; it no longer exists.

Insider preference claims under § 24.006(b) must be brought within one year after the transfer.

What has to happen before you file

Nothing. In practice, the claim is often filed alongside an application for an injunction or a receiver to stop further transfers.

What the claim pays

Section 24.008 sets out the remedies:

• Avoidance of the transfer to the extent necessary to satisfy the claim;
• Attachment or other provisional remedy against the asset transferred;
• An injunction against further disposition;
• Appointment of a receiver to take charge of the asset; and
• Any other relief the circumstances require.

Where the transfer is avoided, § 24.009(b) allows a judgment for the value of the asset transferred against the first transferee, the person for whose benefit the transfer was made, or a subsequent transferee who did not take in good faith for value.

Attorney's fees under § 24.013 — the court "may award costs and reasonable attorney's fees as are equitable and just." Discretionary, and available to either side.

Who can be sued

The debtor.

The transferee who received the asset.

The person for whose benefit the transfer was made, even if the asset went elsewhere.

A subsequent transferee, unless they took in good faith for value.

Common defenses

• Good faith for reasonably equivalent value — § 24.009(a) protects a transferee who took in good faith and for reasonably equivalent value.
• Reasonably equivalent value was given, which defeats constructive fraud.
• Solvency at the time of the transfer and afterwards.
• The four-year extinguishment, or the one-year insider period.
• No creditor status — the plaintiff's claim did not exist and was not foreseeable.
• The asset was exempt, and so beyond the creditor's reach anyway. Texas homestead and personal property exemptions are generous, and transferring an exempt asset generally harms no creditor.

What people get wrong

Intent is not always required. Constructive fraud turns on value and solvency, not motive. A transfer made for entirely innocent reasons can still be undone.

The deadline extinguishes the claim. This is not an ordinary limitations period that must be pleaded as an affirmative defense in the usual way.

Exempt property is usually a dead end. Moving a homestead, or converting non-exempt assets into exempt ones, is treated differently from putting a non-exempt asset beyond reach.

Good faith purchasers are protected. The person who paid fair value without notice keeps the asset.

Where it came from

Fraudulent transfer law traces to the Statute of 13 Elizabeth in 1571, which voided transfers made to hinder or delay creditors. The badges of fraud are a direct inheritance — courts have used circumstantial markers of intent for four centuries because debtors do not announce their purpose.

Texas adopted the Uniform Fraudulent Transfer Act in 1987, replacing an older statute and adding the constructive fraud provisions that make solvency and value the operative facts rather than intent. The extinguishment language in § 24.010 was part of the uniform act, and Texas courts have given it full effect.

Common questions

How long do I have to sue over a fraudulent transfer in Texas?

Four years from the transfer, or one year from when you discovered or reasonably could have discovered it, whichever is later. Insider preference claims run one year.

Do I have to prove the debtor meant to cheat me?

Not for constructive fraud. A transfer for less than reasonably equivalent value by an insolvent debtor is enough.

Can I recover attorney's fees?

The court may award costs and reasonable attorney's fees as are equitable and just, and the provision runs both ways.

What can the court order?

Undo the transfer, attach the asset, enjoin further transfers, appoint a receiver, or enter judgment for the value of the asset against the transferee.

What if the person who got the property paid for it?

A transferee who took in good faith and for reasonably equivalent value is protected.

They transferred their house. Does that count?

Texas homestead protection is broad, and transferring an asset a creditor could never have reached generally does not harm the creditor.

Where these rules live

• CPRC § 16.051 — Residual four-year limitations period
• CPRC § 31.002 — Turnover after judgment
• CPRC § 64.001 — Availability of a receiver
• CPRC § 65.011 — Grounds for injunction
• CPRC § 61.001 — Grounds for attachment
• CPRC § 63.001 — Grounds for garnishment