Conveyance Of Personal Property Without Delivery - Void And Voidable Transfers And Undertakings - CA Civil Law

Section § 3440

This law states that if you transfer personal property you own but don't actually hand it over and change possession, the transfer doesn't count against any of your creditors, buyers in good faith, or their successors, even if they come into the picture after the transfer. A creditor, in this context, is anyone who has a legal claim against you, including someone managing your assets for the benefit of other people, like a trustee. These trustees or assignees can use any legal actions that the original creditors could use, but only for the creditors they represent and only if those actions are available to them.

(a) Except as otherwise provided in this chapter, every transfer of personal property made by a person having at the time the possession of the property, and not accompanied by an immediate delivery followed by an actual and continued change of possession of the property, is void as against the transferor’s creditors (secured or unsecured) at the time of the transfer and those who become creditors while the transferor remains in possession and the successors in interest of those creditors, and as against buyers from the transferor for value in good faith subsequent to the transfer.

(b) As used in this chapter, “creditor” means a person who has a claim, as defined in Section 3439.01, and includes an assignee of a general assignment for the benefit of creditors, as defined in Section 493.010 of the Code of Civil Procedure, of a debtor. “Creditor” also includes any person to whom the transferor’s estate devolves in trust for the benefit of persons other than the transferor. Any such assignee or trustee may exercise any and all the rights and remedies specified in this chapter, if they are available to any one or more creditors of the assignor or transferor who are beneficiaries of the assignment or trust, and, in that event (1) only to the extent the rights or remedies are so available and (2) only for the benefit of those creditors whose rights are asserted by the assignee or trustee.

transfer of personal property immediate delivery change of possession creditors secured creditors unsecured creditors good faith buyers trustee assignee general assignment benefit of creditors estate devolves in trust rights and remedies successors in interest possession of property

(Amended by Stats. 1987, Ch. 40, Sec. 3. Effective June 8, 1987.)

Section § 3440.1

This law states that certain types of property transfers or transactions are not governed by this specific chapter of California law. These exceptions include legal claims ('things in action'), ships or cargo overseas, sales of certain financial instruments, wine or brandy transactions if properly documented and recorded, general creditor benefit assignments, property protected from money judgments, and standing timber. It also excludes personal property transfers that meet specific notice and filing requirements, foreign property under certain conditions, government entity transfers, and transactions involving legal title registrations or leasebacks, among others.

This chapter does not apply to any of the following:

(a) Things in action.

(b) Ships or cargoes if either are at sea or in a foreign port.

(c) The sale of accounts, chattel paper, payment intangibles, or promissory notes governed by the Uniform Commercial Code, security interests, and contracts of bottomry or respondentia.

(d) Wines or brandies in the wineries, distilleries, or wine cellars of the makers or owners of the wines or brandies, or other persons having possession, care, and control of the wines or brandies, and the pipes, casks, and tanks in which the wines or brandies are contained, if the transfers are made in writing and executed and acknowledged, and if the transfers are recorded in the book of official records in the office of the county recorder of the county in which the wines, brandies, pipes, casks, and tanks are situated.

(e) A transfer or assignment made for the benefit of creditors generally or by an assignee acting under an assignment for the benefit of creditors generally.

(f) Property exempt from enforcement of a money judgment.

(g) Standing timber.

(h) Subject to the limitations in Section 3440.3, a transfer of personal property if all of the following conditions are satisfied:

(1) Before the date of the intended transfer, the transferor or the transferee files a financing statement, with respect to the property transferred, authorized in an authenticated record by the transferor. The financing statement shall be filed in the office of the Secretary of State in accordance with Chapter 5 (commencing with Section 9501) of Division 9 of the Commercial Code, but may use the terms “transferor” in lieu of “debtor” and “transferee” in lieu of “secured party.” The provisions of Chapter 5 (commencing with Section 9501) of Division 9 of the Commercial Code shall apply as appropriate to the financing statement.

(2) The transferor or the transferee publishes a notice of the intended transfer one time in a newspaper of general circulation published in the public notice district in which the personal property is located, if there is one, and if there is none in the public notice district, then in a newspaper of general circulation in the county in which the personal property is located. The publication shall be completed not less than 10 days before the date the transfer occurs. The notice shall contain the name and address of the transferor and transferee and a general statement of the character of the personal property intended to be transferred, and shall indicate the place where the personal property is located and a date on or after which the transfer is to be made.

(i) Personal property not located within this state at the time of the transfer or attachment of the lien if the provisions of this subdivision are not used for the purpose of evading this chapter.

(j) A transfer of property that (1) is subject to a statute or treaty of the United States or a statute of this state that provides for the registration of transfers of title or issuance of certificates of title and (2) is so far perfected under that statute or treaty that a bona fide purchaser cannot acquire an interest in the property transferred that is superior to the interest of the transferee.

(k) A transfer of personal property in connection with a transaction in which the property is immediately thereafter leased by the transferor from the transferee provided the transferee purchased the property for value and in good faith pursuant to subdivision (c) of Section 10308 of the Commercial Code.

(l) Water supply property, as defined in Section 849 of the Public Utilities Code.

(m) A transfer of property by any governmental entity.

(n) For the purposes of this section, publication of notice in a public notice district is governed by Chapter 1.1 (commencing with Section 6080) of Division 7 of Title 1 of the Government Code.

things in action ships at sea cargo in foreign port sale of accounts chattel paper payment intangibles promissory notes Uniform Commercial Code wines or brandies creditor benefit money judgment exemption standing timber financing statement personal property transfer government property transfer

(Amended by Stats. 2016, Ch. 703, Sec. 4. (AB 2881) Effective January 1, 2017.)

Section § 3440.2

This section explains that when you transfer personal property, the transfer is protected from being reversed due to claims by creditors or buyers that come up after certain conditions are satisfied. Basically, if you meet the set conditions, like filing some necessary paperwork and making a public notice, the transfer remains valid even if a creditor or buyer raises a claim after these are done.

Subject to Section 3440.3, a transfer of personal property shall not be void under Section 3440 as against a creditor of the transferor or as against a buyer from the transferor, if the creditor’s or buyer’s claim or right against the transferor arises after the date all of the requirements of subdivision (h) of Section 3440.1 have been met, other than the requirement that filing of the financing statement and publication of the notice referred to therein be completed prior to the transfer.

transfer of personal property creditor protection buyer protection filing requirements financing statement publication of notice transferor creditor claim property transfer conditions Section 3440.1 requirements void transfer

(Added by Stats. 1985, Ch. 1368, Sec. 2.)

Section § 3440.3

This section of the law says that if someone sells personal property and certain legal conditions are met, the sale will still be invalid against someone who buys that property as a regular business transaction, even if those conditions are supposed to protect the sale. In other words, the regular buyer has more rights to keep the property than those conditions provide.

A transfer of personal property, as to which the conditions set forth in subdivision (h) of Section 3440.1, Section 3440.2, or subdivision (b) of Section 3440.5 are satisfied, shall, nevertheless, be void under Section 3440 as against a person who has purchased the personal property from the transferor and who is a “buyer in the ordinary course of business,” as defined in paragraph (9) of subdivision (b) of Section 1201 of the Commercial Code.

transfer of personal property conditions subdivision (h) of Section 3440.1 Section 3440.2 buyer in the ordinary course of business paragraph (9) of subdivision (b) of Section 1201 Commercial Code transferor property purchase invalid transfer personal property sale protections

(Amended by Stats. 2006, Ch. 254, Sec. 5. Effective January 1, 2007.)

Section § 3440.4

This law says that if someone buys personal property for a fair price and in good faith from the person who received it from the original owner, their rights aren't affected by this chapter of the law, as long as the original owner doesn't have the property anymore.

This chapter does not affect the rights of a buyer for value in good faith who purchases the transferred personal property from the transferee or from a successor in interest of the transferee, provided the transferor is no longer in possession of the personal property at the time of the purchase by that buyer.

buyer for value good faith purchaser personal property transfer transferee successor in interest original owner possession transferor purchase rights property ownership change

(Added by Stats. 1985, Ch. 1368, Sec. 4.)

Section § 3440.5

This law addresses the rights of secured parties who get a security interest in personal property bought from someone else. If the original owner no longer has the property, and the secured party acts in good faith and pays value, their rights aren't affected. To maintain these rights, two main conditions must be met: a special filing of a financing statement with the Secretary of State and a public notice in a local newspaper about the transfer at least 10 days before a security agreement is signed. These filings have specific language and procedural requirements. However, simply meeting the filing requirement doesn't automatically protect the security interest; other rules apply to fully secure it.

(a) This chapter does not affect the rights of a secured party who, for value and in good faith, acquires a security interest in the transferred personal property from the transferee, or from the transferee’s successor in interest, if the transferor is no longer in possession of the personal property at the time the security interest attaches.

(b) Additionally, except as provided in Section 3440.3, this chapter does not affect the rights of a secured party who acquires a security interest from the transferee, or from the transferee’s successor in interest, in the personal property, if all of the following conditions are satisfied:

(1) On or before the date the security agreement is executed, the intended debtor or secured party files a financing statement with respect to the property transferred, signed by the intended debtor. The financing statement shall be filed in the office of the Secretary of State in accordance with Chapter 5 (commencing with Section 9501) of Division 9 of the Commercial Code, but shall use the terms “transferor” in lieu of “debtor,” “transferee” in lieu of “secured party,” and “secured party” in lieu of “assignee of secured party.” The provisions of Chapter 5 (commencing with Section 9501) of Division 9 of the Commercial Code shall apply as appropriate to the financing statement. For the purpose of indexing, and in any certification of search, the Secretary of State may refer to any financing statement filed pursuant to this paragraph as a financing statement under the Commercial Code and may describe the transferor as a debtor and the transferee as a secured party.

(2) The intended debtor or secured party publishes a notice of the transfer one time in a newspaper of general circulation published in the public notice district in which the personal property is located, if there is one, and if there is none in the public notice district, then in a newspaper of general circulation in the county in which the personal property is located. The publication shall be completed not less than 10 days before the date of execution by the intended debtor of the intended security agreement. The notice shall contain the names and addresses of the transferor and transferee and of the intended debtor and secured party, a general statement of the character of the personal property transferred and intended to be subject to the security interest, the location of the personal property, and the date on or after which the security agreement is to be executed by the intended debtor.

(c) Compliance with paragraph (1) of subdivision (b) shall not perfect the security interest of the secured party. Perfection of that security interest shall be governed by Division 9 (commencing with Section 9101) of the Commercial Code.

(d) For the purposes of this section, publication of notice in a public notice district is governed by Chapter 1.1 (commencing with Section 6080) of Division 7 of Title 1 of the Government Code.

secured party security interest personal property good faith transferee transferor financing statement Secretary of State Commercial Code filing requirements public notice newspaper publication security agreement possession attachment

(Amended by Stats. 2016, Ch. 703, Sec. 5. (AB 2881) Effective January 1, 2017. Note: Amendment by Stats. 1999, Ch. 991, is operative July 1, 2001, by Sec. 75 of Ch. 991.)

Section § 3440.6

This law limits the time you have to take legal action or seize property related to a transfer to within one year from certain important dates. These dates include when you discovered or should have discovered the transfer using reasonable effort, when you actually learned about it, when the property changed hands, or when specific filing and publicity requirements were met if a financing statement was involved and still valid.

No action shall be brought or levy made under this chapter more than one year after the earliest of the following dates:

(a) The date the person bringing the action or making the levy should have discovered the transfer in the exercise of reasonable diligence.

(b) The date the person bringing the action or making the levy obtained actual knowledge of the transfer.

(d) If the financing statement filed pursuant to subdivision (h) of Section 3440.1 has not lapsed, the date the filing and publication requirements of subdivision (h) of Section 3440.1 were met, other than the requirement that the filing of the financing statement and publication of the notice referred to therein be completed prior to the transfer.

action time limit property transfer reasonable diligence actual knowledge possession change financing statement transfer discovery seizure deadline filing and publication property levy Section 3440.1 transfer knowledge seizure timing

(Added by Stats. 1985, Ch. 1368, Sec. 5.)

Section § 3440.9

This section is saying that certain parts of the Commercial Code, specifically subdivision (2) of Section 2402 and subdivision (a) of Section 10308, aren't affected or limited by the rules outlined in this chapter.

Subdivision (2) of Section 2402 and subdivision (a) of Section 10308 of the Commercial Code are not restricted by the provisions of this chapter.

Subdivision (2) of Section 2402 Subdivision (a) of Section 10308 Commercial Code provisions restrictions chapter exemptions non-restricted sections legal provisions impact exemption from limitations California Commercial Code applicability

(Amended by Stats. 1994, Ch. 668, Sec. 4. Effective January 1, 1995.)