The real estate collapse has increased the need for asset protection, and in one way, it has made easier some asset protection tools. Many real estate owners seeking to protect unencumbered properties from potential lawsuits from their mortgage lenders ask whether they can transfer title of the free and clear properties to business associates, friends, or even to family members. Transfers of title without fair consideration are subject to reversal as fraudulent conveyances up to four years after the transfer is made. Transfers for reasonably equivalent value are usually protected from allegations of fraudulent transfers. Owners can sell or transfer their properties to anyone as long as the conveyance is in consideration for receipt of reasonable equivalent value. Reasonably equivalent value may or may not be the same as fair market value; some bankruptcy courts have upheld sales at 20 to 30 percent less than fair market value as a transfer for "reasonably equivalent value."
In a depressed real estate market less money need change hands to substantiate a conveyance when market values, and reasonably equivalent values, are depressed Real estate appraisers have told me that the market is almost completely illiquid and that as a result the practical value of many formally valuable properties is close to zero; real estate cannot be sold or financed. People who want to move properties to closely related buyers may be able to sell the properties in consideration for very little money and defend that transfer against fraudulent conveyance allegations in today's market environment.
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