Colorado § 38-8-105 - Transfer or obligation voidable as to present and future creditors.

§ 38-8-105. Transfer or obligation voidable as to present and future creditors.

(1) A transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor's claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation:

(a) With actual intent to hinder, delay, or defraud any creditor of the debtor; or

(b) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor:

(I) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction; or

(II) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor's ability to pay as they became due.

(2) In determining actual intent under subsection (1)(a) of this section, consideration may be given, among other factors, to whether:

(a) The transfer or obligation was to an insider;

(b) The debtor retained possession or control of the property transferred after the transfer;

(c) The transfer or obligation was disclosed or concealed;

(d) Before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit;

(e) The transfer was of substantially all the debtor's assets;

(f) The debtor absconded;

(g) The debtor removed or concealed assets;

(h) The value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred;

(i) The debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred;

(j) The transfer occurred shortly before or shortly after a substantial debt was incurred; and

(k) The debtor transferred the essential assets of the business to a lienor that transferred the assets to an insider of the debtor.

(3) A creditor making a claim for relief under subsection (1) of this section has the burden of proving the elements of the claim for relief by a preponderance of the evidence.

(4) It is the intent of the general assembly that the last paragraph of comment eight to section four of the "Uniform Voidable Transactions Act", as amended in 2014 by the Uniform Law Commission, does not apply in Colorado.

Source: L. 91: Entire article added, p. 1685, § 1, effective July 1. L. 2025: IP(1), (1)(b)(II), IP(2), and (2)(k) amended and (3) and (4) added, (SB 25-133), ch. 57, p. 239, § 4, effective August 6.

Editor's note - Colorado legislative change: This section was numbered as section 4 in the uniform act.

ANNOTATION

The Colorado Uniform Fraudulent Transfer Act (CUFTA) changes the common law rule that a claim of conspiracy to fraudulently convey property fails unless the claimant establishes a lien against the property transferred. Double Oak Constr., L.L.C. v. Cornerstone Dev. Int'l, L.L.C., 97 P.3d 140 (Colo. App. 2003).

The principle behind the "lien requirement" rule is that, until a creditor obtains a lien giving him or her vested or specific rights in the debtor's property, the debtor is legally free to do what he or she will with his or her property. However, modern fraudulent transfer law, like CUFTA, has dispensed with the lien requirement, focusing instead on the debtor's intent to frustrate the creditor once its claim is made known. Double Oak Constr., L.L.C. v. Cornerstone Dev. Int'l, L.L.C., 97 P.3d 140 (Colo. App. 2003).

A transfer in violation of CUFTA is a legal wrong that will support a conspiracy claim. A creditor who does not have a lien on the subject property is nevertheless entitled to assert a civil conspiracy cause of action against persons who participate in a fraudulent conveyance. Double Oak Constr., L.L.C. v. Cornerstone Dev. Int'l, L.L.C., 97 P.3d 140 (Colo. App. 2003).

For purposes of CUFTA, the intent of a transferee can be imputed to the debtor when the transferee is in a position to dominate or control the disposition of the debtor's property. Schempp v. Lucre Mgmt. Group, 18 P.3d 762 (Colo. App. 2000).

The transferee's intent is not interchangeable or synonymous with the debtor's intent. Schempp v. Lucre Mgmt. Group, 75 P.3d 1157 (Colo. App. 2003).

Nothing in this section indicates that the plaintiff's burden of proving fraudulent intent may be reduced by attaching a presumption of fraud to a transaction between a principal and an agent. Schempp v. Lucre Mgmt. Group, 75 P.3d 1157 (Colo. App. 2003).

Whether a debtor intended to hinder, delay, or defraud creditors is a question of fact. The movant has the burden of proving all elements of a fraudulent transfer before the debtor must come forward to prove his or her defenses. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

One spouse may become a creditor of the other for purposes of subsection (1)(a) when the transferring spouse has reason to know that dissolution of marriage proceedings are imminent. Rios de Martinez v. Landaverde, 2024 COA 115, 562 P.3d 908.

Evidence that transactions were in the ordinary course of business may negate the actual intent element of fraudulent transfer. Sender v. Mann, 423 F. Supp. 2d 1155 (D. Colo. 2006).

In determining whether a transfer is made with actual intent to defraud, CUFTA sets forth several factors, known as the "badges of fraud", from which an inference of fraudulent intent may be drawn. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

When these "badges of fraud" are present in sufficient number, they may give rise to an inference or presumption of an intent to defraud. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

Separate findings are not required on each of the "badges of fraud" in subsection (2) where the findings and the record make it clear that the court was aware of and considered many, if not all, of such factors. Silverberg v. Colantuno, 991 P.2d 280 (Colo. App. 1998).

"Reasonably equivalent value" is not the same as market value, although market value is an important factor to be used in the assessment. Silverberg v. Colantuno, 991 P.2d 280 (Colo. App. 1998).

Whether "reasonably equivalent value" has been received is a question of fact. What constitutes "reasonably equivalent value" for the transfer requires an analysis of all of the facts and circumstances surrounding the transaction. The standard of reasonably equivalent value implies a rule of reasonableness in light of the particular circumstances. Reasonable equivalence is not synonymous with market value, even though market value is an important factor to be utilized in the assessment. For purposes of the Colorado Uniform Fraudulent Transfer Act, equity looks to the substance of the transaction rather than its form. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

A transfer for which the transferor received no direct or indirect benefit cannot be considered reasonably equivalent value, even with the undisputed history of the transfers of the property back and forth between a husband and wife for zero dollars. Leverage Leasing Co. v. Smith, 143 P.3d 1164 (Colo. App. 2006).

Reserve asset was not unreasonably small and was therefore not constructively fraudulent under subsection (1)(b)(I). In dispute over real estate commission between real estate broker and judgment debtor, broker failed to show that debtor should have reasonably foreseen that its distribution of proceeds from real estate sale would create an unreasonable risk of insolvency. CB Richard Ellis, Inc. v. CLGP, LLC, 251 P.3d 523 (Colo. App. 2010).

In considering whether distribution of proceeds from real estate sale was constructively fraudulent under subsection (1)(b)(II), trial court applied the proper two-pronged test, consisting of both a subjective and an objective prong. In dispute over real estate commission between real estate broker and judgment debtor, trial court's finding that debtor did not have an intent or belief that it would be unable to pay entire commission addressed the subjective prong. With regard to the objective prong, trial court found that debtor's reserve asset was reasonable to pay its debts as they came due. CB Richard Ellis, Inc. v. CLGP, LLC, 251 P.3d 523 (Colo. App. 2010).

The failure to pay the taxes due results in a forfeiture of the original owner's interest in the property, by operation of law, to the state, which then grants title to the property to the holder of the lien free and clear of any other claims. Because the state transferred the tax deeds free of all prior interests, there was no transfer by a debtor, as is required to violate CUFTA. In re Grandote Country Club Co., 252 F.3d 1146 (10th Cir. 2001).

Where property was acquired through a regularly conducted tax sale subject to a competitive bidding procedure, the tax sale constitutes transfer for "reasonably equivalent value" under CUFTA. In re Grandote Country Club Co., 252 F.3d 1146 (10th Cir. 2001).

The recording of a mortgage is a transfer under CUFTA. Krol v. Unglaub, 332 B.R. 303 (Bankr. N.D. Ill. 2005).

Debtor's assets of between $785,000 and $800,000 were unreasonably small in relation to an allegedly fraudulent transfer under subsection (1)(b)(I) where the debtor was exposed to $2 million in liability. Tiger v. Anderson, 976 P.2d 308 (Colo. App. 1998).

A subsidiary's loan payments on behalf of its corporate parent are made in exchange for reasonably equivalent value if the subsidiary receives a benefit of the loan made to its parent. Ciccarelli v. Guaranty Bank, 99 P.3d 85 (Colo. App. 2004).

Applied in Vickery v. Evelyn V. Trumble Living Trust, 277 P.3d 864 (Colo. App. 2011); In re Blair, 594 B.R. 712 (Bankr. D. Colo. 2018); Wilson v. Pauling, 457 F. Supp. 3d 965 (D. Colo. 2020); In re Ranta, 664 B.R. 817 (Bankr. D. Colo. 2024).