Creditors rights Flashcards
Fraudulent Conveyance
A fraudulent convenience with intent to defraud a creditor will void a transfer or property by a debt. The debtor must have converted property with the intent to defraud a creditor. The title of a purchaser for valuable consideration will not be affected unless the purchaser had notice of the fraudulent intent of the grantor. Thus, a fraudulent conveyance does not affect the title of a bona fide purchaser (“BFP”). The fraud must be clearly alleged, and proof of its existence must be clear and convincing. Facts may be pleaded which give rise to an inference of fraud, and the burden of proof then shifts to the defendant to show that the transaction was bona fide.
Voluntary Conveyance without consideration
A voluntary conveyance without consideration will also void a transfer of property by a debtor. This is a transfer made without receipt by the debtor of consideration deemed valuable in law while the debtor was insolvent or became insolvent because of the transfer. Additionally, the creditor seeking to void a voluntary transfer must show that it was a creditor prior to the conveyance. [Va. Code Ann. §55.1-401] Fraud is not an element required to prove the voidability of the transfer.
Constructive trusts
Constructive trusts arise by construction of law independently of the intention of the parties. They are imposed to avoid what would otherwise be a fraud. A constructive trust is a proper remedy when property is given or devised to a defendant in breach of a donor’s contract with plaintiff. [Cox v. Mixon, 51 Va. Cir. 168 (2000)] A constructive trust may be imposed not only when there is fraud, but also when the property has been fairly and properly acquired, but equity deems that the property should not be retained
Unjust enrichment
Unjust enrichment occurs when a defendant retains money or benefits that in justice and equity belong to the plaintiff. The remedy for unjust enrichment is the imposition of a quasi-contract on the party in receipt of the benefit. To prove a quasi-contract, a plaintiff must show three elements: the defendant received a benefit conferred by the plaintiff; the defendant knew he was receiving the benefit; and retention of the benefit by the defendant is inequitable without paying for it.
