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Simple English definitions for legal terms
constructive transfer
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A quick definition of constructive transfer:
A constructive transfer is when someone gives away or gets rid of something they own, either directly or indirectly, even if they still have some control over it. This can include things like selling, giving as a gift, or putting a lien on the item. It can also refer to someone else delivering an item on the owner's behalf. However, if someone tries to pretend to give something away or hide it from their creditors, that is called a fraudulent transfer.
A more thorough explanation:
Constructive transfer refers to any mode of disposing of or parting with an asset or an interest in an asset, including a gift, the payment of money, release, lease, or creation of a lien or other encumbrance. It can be direct or indirect, absolute or conditional, voluntary or involuntary. This term also includes retention of title as a security interest and foreclosure of the debtor's equity of redemption.
For example, if a person sells their car to another person, it is a direct and voluntary constructive transfer. However, if a person gives their car to their friend to sell it on their behalf, it is an indirect and conditional constructive transfer.
Another example of constructive transfer is when someone delivers an item, especially a controlled substance, by someone other than the owner but at the owner's direction.
It is important to note that a colorable transfer, which is a sham transfer having the appearance of authenticity, is not a valid constructive transfer.