Protecting Assets with No Equity

I recently had a client inquiry with us regarding the transfer of real property which was upside down or had negative equity. Typically when one transfers property of value to another to avoid a creditor’s reach, the creditor can seek to have the transaction reversed under the theory of a fraudulent transfer.

Florida statute 726.102 seems to define assets which are subject to this to only include those which have a value on the date of transfer. If the property had a negative equity, it would appear that a future increase in value would not subject the property to the fraudulent transfer statutes. Given this a property transferred when there was no equity in the property should be protected if the property’s value later increased. There does not appear to be any case-law that is directly on topic and of course there is no guarantee that this would protect the asset. If you are trying to structure your assets for protection from creditors you should talk with a Jacksonville Asset Protection Lawyer to review your circumstances and what options you have.