Fraudulent Transfers Under the Texas Uniform Fraudulent Transfer Act

By Hank FasthoffJuly 20, 2026

A debtor can't defeat a creditor by transferring property to a relative, affiliated company, or cooperative business partner while keeping the benefit of the property. Chapter 24 of the Texas Business and Commerce Code allows a creditor to challenge specified transfers and obligations that hinder collection or leave the debtor without adequate value.

Texas calls the statute the Uniform Fraudulent Transfer Act, commonly shortened to TUFTA. Some other states use the Uniform Voidable Transactions Act name, while Texas retains the earlier statutory title. A challenged transaction remains effective unless a court grants relief authorized by TUFTA.

A Claim Can Begin Before Judgment

TUFTA protects more than judgment creditors. Section 24.002 defines a claim as a right to payment or property, whether the right has been reduced to judgment or remains disputed, contingent, unmatured, secured, or unsecured. A creditor may therefore plead a TUFTA claim in the lawsuit establishing the underlying debt when the facts support both claims.

Timing affects available remedies. Before judgment, a creditor may seek avoidance, attachment, an injunction, receivership, or other relief authorized by Section 24.008 and the applicable procedural rules. After obtaining a judgment, the creditor may ask the court to permit execution on the transferred asset or its proceeds.

Postjudgment turnover provides a collection procedure rather than a substitute for adjudicating a transferee's disputed ownership. In Alexander Dubose Jefferson & Townsend LLP v. Chevron Phillips Chemical Co., 540 S.W.3d 577, 585 (Tex. 2018), the Texas Supreme Court described turnover proceedings as purely procedural and unavailable to determine the substantive rights of parties or nonjudgment debtors. A creditor seeking relief against a transferee should plead the TUFTA claim, serve the affected parties, and establish the statutory elements. Our article on postjudgment enforcement in Texas addresses turnover and other collection procedures.

The Debtor Must Transfer an Asset or Incur an Obligation

TUFTA defines transfer broadly. The term includes direct and indirect dispositions, payments, releases, leases, liens, and other encumbrances affecting an asset or an interest in one. A debtor may also incur a voidable obligation, such as granting an insider a lien for a fabricated or inflated debt.

Property must qualify as the debtor's asset. Section 24.002 excludes property to the extent it is encumbered by a valid lien or generally exempt under nonbankruptcy law. A fully encumbered asset may provide no value for unsecured creditors, while equity above a valid lien may remain subject to the statute. A transfer of exempt homestead property presents a different issue from a transfer of nonexempt rental property. Our article on Texas property exemptions for judgment creditors explains the principal exemption categories.

Section 24.007 determines when a transfer occurs. For real property, the operative date generally turns on perfection against a good faith purchaser. For other property, the operative date is when the transfer is perfected against a creditor who could otherwise obtain a judicial lien. An unperfected transfer may be treated as made immediately before the TUFTA action begins, which may alter both priority and the repose analysis.

Actual Intent Under Section 24.005

Section 24.005(a)(1) applies when a debtor makes a transfer or incurs an obligation with actual intent to hinder, delay, or defraud a creditor. It applies to creditors whose claims arose before the transfer and to claims arising within a reasonable time afterward.

Direct proof of intent is uncommon, so Section 24.005(b) identifies 11 circumstances commonly called badges of fraud. A court may consider whether an insider received the transfer, whether the debtor retained possession or control, and whether the debtor concealed the transaction. Other listed circumstances include a suit or threatened suit before the transaction and a transfer of substantially all assets. The remaining badges concern absconding, concealing assets, consideration that wasn't reasonably equivalent, insolvency near the transaction, timing near a substantial debt, and transfer of essential business assets to a lienholder who then conveyed them to an insider.

Courts evaluate the badges together. Several badges supported by bank records, deeds, company records, testimony, and transaction timing may establish a persuasive circumstantial case. In Janvey v. Golf Channel, Inc., 487 S.W.3d 560, 566 (Tex. 2016), the Texas Supreme Court explained that a combination of several badges presents a strong case of fraud and that intent ordinarily presents a fact question.

Actual intent concerns the debtor's purpose. A transferee may have defenses even when the debtor acted fraudulently, so evidence concerning the transferee's knowledge, investigation, and consideration requires separate analysis.

Constructive Fraud Without Proof of Intent

TUFTA also covers specified transactions without proof of dishonest intent. Section 24.005(a)(2) applies when the debtor made the transfer or incurred the obligation without receiving reasonably equivalent value and one of two financial conditions existed. Under the first condition, the debtor was engaged or was about to engage in a business or transaction for which the debtor's remaining assets were unreasonably small. The second condition concerns a debtor who intended to incur, believed, or reasonably should have believed that the debtor would incur debts beyond the debtor's ability to pay as they became due. This theory applies to qualifying present and future creditors.

Section 24.006(a) protects a creditor whose claim arose before the transfer. That creditor must establish that the debtor received less than reasonably equivalent value and was insolvent at the time or became insolvent because of the transaction.

A separate insider rule appears in Section 24.006(b). A transfer for an antecedent debt may be voidable when the creditor's claim predated the transfer and the transferee was an insider. The debtor must also have been insolvent, and the insider must have had reasonable cause to believe the debtor was insolvent. The transferee may invoke the specific defenses in Section 24.009(f), including qualifying new value, ordinary course transactions, and specified good faith rehabilitation financing.

Insolvency and Reasonably Equivalent Value

Section 24.003 uses a balance sheet test. A debtor is insolvent when debts exceed assets at a fair valuation, subject to the statute's exclusions. A debtor who generally fails to pay debts as they become due is presumed insolvent.

Financial proof should address the transaction date rather than the debtor's condition months afterward. Relevant evidence may include balance sheets, bank records, tax returns, valuations, accounts payable aging, lien balances, loan files, distributions, and testimony concerning omitted or overstated assets and liabilities.

Section 24.004 recognizes value when the debtor receives property or when an antecedent debt is secured or satisfied. An unperformed promise to furnish support outside the ordinary course of the promisor's business doesn't qualify. A regularly conducted, noncollusive foreclosure sale or exercise of a power of sale supplies reasonably equivalent value for the constructive fraud provisions.

Reasonable equivalence allows a range rather than requiring dollar for dollar equality. Janvey v. Golf Channel held that objectively valuable services may qualify when the transferee fully performed a lawful arm's length contract at market rates in the ordinary course of business. Courts evaluate value at the time of the exchange instead of using hindsight based on whether the debtor later failed or misused what it received.

Remedies and Transferee Liability

Section 24.008 permits avoidance only to the extent necessary to satisfy the creditor's claim. Available relief may include attachment, an injunction against another disposition, appointment of a receiver, and other relief supported by equity and the procedural rules. A judgment creditor may levy on the transferred asset or its proceeds if the court orders that relief.

The creditor may also seek a money judgment under Section 24.009. Recovery is limited to the lesser of the transferred asset's adjusted value or the amount necessary to satisfy the creditor's claim. Potential defendants include the first transferee, the person who benefited from the transfer, and specified subsequent transferees. Different defenses apply depending on where each defendant appears in the transfer chain.

Section 24.013 permits the court to award costs and reasonable attorney's fees when the award is equitable and just. The statute makes the award discretionary, so neither side should treat fees as automatic.

Good Faith Transferees

Section 24.009(a) protects a person who took in good faith and for reasonably equivalent value against an actual intent claim under Section 24.005(a)(1). A subsequent good faith transferee who took for value also receives statutory protection from the specified monetary remedy.

Good faith requires attention to facts that would cause a reasonable person to investigate. In Janvey v. GMAG, L.L.C., 592 S.W.3d 125, 130–31 (Tex. 2019), the Texas Supreme Court held that a transferee on inquiry notice must investigate its suspicions diligently to establish good faith. That duty applies even when a diligent investigation wouldn't have revealed the fraud.

A good faith transferee who provided some value may receive a lien, retain an interest, enforce an obligation, or reduce judgment liability to the extent of that value. Section 24.009 also protects qualifying improvements, including repairs, taxes, superior or equal lien payments, and asset preservation.

Repose Periods

Section 24.010 extinguishes TUFTA claims on different schedules. An actual intent claim under Section 24.005(a)(1) must be filed within four years after the transfer or obligation or, if later, within one year after the transfer or obligation was or reasonably could have been discovered by the claimant.

Claims under Sections 24.005(a)(2) and 24.006(a) must be filed within four years after the transaction. The insider antecedent debt claim under Section 24.006(b) has a period of one year measured from the transfer date. Special periods apply to claims brought on behalf of a spouse, minor, or ward. Section 24.010(c) excludes the time of a qualifying legal disability when the creditor is under that disability as the period begins.

These deadlines extinguish the cause of action rather than provide an ordinary limitations defense. In Nathan v. Whittington, 408 S.W.3d 870, 874 (Tex. 2013), the Texas Supreme Court classified Section 24.010 as a statute of repose. A creditor should identify each transfer date, perfection date, discovery date, and legal theory before selecting a filing deadline.

Real Property and Lis Pendens

A TUFTA action seeking to avoid a transfer of real property may support a notice of lis pendens because the requested judgment concerns title or an interest in the property. Section 12.007 of the Texas Property Code governs the notice, and Section 12.0071 provides procedures for expunction.

A lis pendens provides notice of the pending property claim. Injunctive relief, adjudication of the creditor's claim, and proof of the TUFTA elements require separate action. The pleadings must seek relief that directly affects the identified real property, and the creditor should comply with the recording and service requirements.

Bankruptcy Changes Control of the Claim

A bankruptcy filing may place fraudulent transfer litigation under federal bankruptcy law and the control of a trustee or debtor in possession. The automatic stay may restrict collection activity, and Bankruptcy Code Sections 544, 548, and 550 provide federal avoidance and recovery remedies with their own elements and deadlines.

When a debtor or transferee files bankruptcy, a creditor should determine who owns the avoidance claim, whether the stay applies, and whether the trustee intends to pursue the transfer. Continuing state court collection without that analysis may violate the stay or duplicate a claim belonging to the bankruptcy estate.

What Creditors and Transferees Should Preserve

A creditor should preserve deeds, account statements, wire records, company ledgers, tax returns, lien documents, valuation evidence, communications, and discovery responses. Public records may identify a transfer, but establishing intent, insolvency, value, and transferee knowledge usually requires the transaction file and financial evidence surrounding the transfer date.

A transferee should preserve proof of payment, valuation work, diligence, approvals, contracts, invoices, delivery, and the business reason for the transaction. When unusual facts create suspicion, the record should show what the transferee investigated and what the investigation established.

TUFTA litigation turns on the specific asset, transfer date, creditor status, value exchanged, debtor finances, and transferee conduct. A creditor should select the statutory theory and remedy before the applicable repose period expires. A transferee should address good faith and value with evidence created when the transaction occurred rather than explanations assembled after litigation begins.