Governor Brown signed the new Uniform Voidable Transactions Act into law on July 2, 2015. The bill received unanimous support in both the Senate and the Assembly and was recommended by the Commercial Transactions Committee. This law renames and amends the pre-existing Uniform Fraudulent Transfer Act. This new law will impact both debtors and creditors.
What is the Uniform Voidable Transfer Act?
California’s pre-existing Uniform Fraudulent Transfer Act is based in part on the model Uniform Fraudulent Transfer Act, which has been adopted at least in part by various states including Georgia, Idaho, Kentucky, Minnesota, New Mexico, North Carolina, and North Dakota. It establishes the conditions under which a transfer made or obligation incurred by a debtor is fraudulent as to the creditor. It also sets remedies a creditor can obtain with respect to a fraudulent transfer or obligation. One potential remedy is the voiding of the transfer. This new law renames the law the Uniform Voidable Transaction Act. It also adopts certain changes promulgated by the Uniform Law Commission. It specifies a burden of proof in making and defending a claim for relief under this law. It specifies the basis for determining the governing law for a claim for relief under the act. It modifies definitions applicable to the act. It removes a definition of insolvency and adds new definitions including definitions for “record” and “sign.” It replaces the term “fraudulent” with the term “voidable.” These modifications are only applicable if the right of action accrued, the transfer was made, or the obligation was incurred on or after the effective date of the bill. That date is January 1, 2016.