The Ultimate Guide to the New Jersey Uniform Voidable Transaction Act (UVTA) and Dealing with Fraudulent Transfers

What Is the New Jersey Voidable Transaction Act?

The New Jersey Uniform Voidable Transactions Act (UVTA), N.J.S.A. §25:2‑20 et seq., was formerly known as the Uniform Fraudulent Transfer Act (UFTA), and prevents debtors from improperly moving assets to avoid paying creditors. Under this statute, certain transfers can be voided and reversed if they were made with intent to hinder, delay, or defraud creditors or if they involved inadequate consideration while the debtor was insolvent.

📜 Key Elements of a New Jersey Fraudulent Transfer Claim

A transfer or obligation in New Jersey can be challenged as fraudulent if it falls into one of the following categories:

✔ Actual Fraudulent Transfers

That is, where a debtor transferred assets with actual intent to defraud, hinder, or delay creditors — even if the creditor’s claim arose after the transfer.

✔ Constructive Fraudulent Transfers

Where a debtor did not receive reasonably equivalent value and either:

• was about to incur debts beyond their ability to pay, or

• was left with unreasonably small assets for ongoing business.

➕⚖️ New Jersey Modernizes the Law in 2021 and Clarifies that Lower Burden of Proof Applies to Claims

The New Jersey Fraudulent Transfer Act was revised in 2021, officially changing its name to the Uniform Voidable Transactions Act (UVTA) to reflect that not all voidable transfer under the Act require proof of intent to defraud in the traditional sense. Additionally, the revisions established the preponderance of the evidence as the clear burden of proof for all claims under the Act and added a choice-of-law rules based on the debtor's location.

💼 Remedies Available to Creditors under the New Jersey Voidable Transaction Act

If a fraudulent transfer is proven, creditors can seek the following relief under N.J.S.A. §25:2‑29:

✔ Avoidance of the transfer or obligation

✔ Attachment or provisional remedies against transferred assets

✔ Injunctions to prevent further transfer of property

✔ Appointment of a receiver

✔ Other equitable relief as needed

🛡️ Defenses to Fraudulent Transfer Claims

Under N.J.S.A. §25:2‑30, defenses may include:

• Good‑faith transferee with reasonably equivalent value

• Transfer made for a legitimate purpose (not to hinder creditors)

• Transferee without knowledge of debtor’s intent

🕐 When Must You File Your NJ Fraudulent Transfer Lawsuit?

The statutory time limits differ based on the type of fraud alleged:

• Actual fraud claims must be brought within four years after the transfer was made or within one year after discovery of the fraudulent transfer — whichever is later.

  
  

• Constructive fraud claims generally must be filed within four years of the transfer.

⚖️ These limitations periods are strictly applied by NJ courts, and missing them may bar relief.

📍 Notable New Jersey Voidable Transfer Case Law

🧑‍⚖️ Gilchinsky v. National Westminster Bank N.J., 159 N.J. 463 (1999)

This New Jersey Supreme Court decision clarified that courts should examine multiple “badges of fraud” (such as transfers to insiders, concealment, or retention of control) to infer intent. A strong aggregation of such factors can support a voidable transaction claim.

🧑‍⚖️ SASCO 1997 NI, LLC v. Zudkewich, 166 N.J. 579 (2001)

In SASCO, the New Jersey Supreme Court confirmed the 4-year statute of limitations begins at the time of the transfer, it also held that a reasonable commercial creditor is expected to investigate. The court stated that the 1-year discovery extension does not apply if a diligent creditor could have discovered the transfer at the time of default.

Impact: Creditors cannot wait years after a missed payment to investigate. The “clock” for the 1-year discovery rule starts ticking when the creditor has reason to suspect a transfer.

🧑‍⚖️ Nationwide Registry & Sec. v. Melhem (App. Div. 2016)

In this Appellate Division case, the court held that a deed conveying real property was not a transfer under UFTA until the deed was recorded, which affected when the statute of limitations began.

❓ FAQ: New Jersey Voidable Transaction Act

What qualifies as a fraudulent transfer in New Jersey?

A transfer is fraudulent if it was made with actual intent to hinder creditors or without receiving reasonably equivalent value while leaving the debtor insolvent.

Does a creditor need a judgment before filing a claim?

No. A creditor only needs a valid claim — not a judgment — to pursue relief under the Act.

What is the statute of limitations for fraudulent transfers in NJ?

Generally, a lawsuit must be filed within four years of the transfer. Importantly, this clock starts ticking on the date of the transfer, not the date you obtain a judgment against the debtor. There is a limited exception allowing a claim within one year of discovering the fraud if it was concealed.

What acts are considered "Badges of Fraud"?

"Badges of Fraud" are suspicious behaviors that signal an intent to hide assets. These include transferring assets to family members (insiders), retaining control of assets after selling them, transferring assets after being sued, or selling assets for far less than they are worth.

What is "Reasonably Equivalent Value"?

To avoid a claim of constructive fraud, a debtor must receive value that is roughly equal to what they gave up. Crucially, this value must benefit the debtor directly. A transfer that benefits a third party (even one owned by the same person) generally does not count as reasonably equivalent value for the debtor.

What if the transferee acted in good faith?

A transferee who paid value in good faith may have a defense, and the transfer may not be voidable against them.

Can a business owner be personally liable for fraudulent transfers?

Yes. Under the doctrine of "piercing the corporate veil," if an individual uses a corporation as their "alter ego" to abuse the corporate form and advance personal interests (such as hiding assets from creditors), they can be held personally liable for the corporate debts.

How can I recover assets after a fraudulent transfer?

Remedies include setting aside the transfer, obtaining liens on property, injunctions, or appointment of a receiver to recover assets.

What is the standard of proof for a fraudulent transfer claim?

With the 2021 amendment, the New Jersey legislature clarified that not all voidable transfers under the Act require proof of intent to defraud in the traditional sense and that unlike claims for fraud - which require proof by clear and convincing evidence - fraudulent or voidable transfer claims only require proof by a preponderance of the evidence (more likely than not)..

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📞 Need Help With an NJ Fraudulent Transfer Case?

Fraudulent transfer claims involve complex statutory requirements, strict deadlines, and detailed factual investigations. If you believe you are a creditor harmed by a fraudulent transfer — or you’ve been accused of making one contact Kemeny, Ramp & Renaud, LLC today to speak with an experienced New Jersey business litigation attorney.