What is meant by "fraudulent conveyance"?

The term "fraudulent conveyance" refers specifically to the transfer of assets intended to hinder, delay, or defraud creditors. This typically occurs when individuals or entities facing financial difficulties transfer their property to others to evade obligations or debts. Such transfers are scrutinized under law because they can undermine the ability of creditors to collect what is owed to them.

In this context, this form of asset transfer can be seen as a deceptive practice, as it diverts resources away from legitimate claims and can create a false sense of financial stability for the debtor while they are in fact attempting to shield their assets from creditors. Laws against fraudulent conveyance exist to protect the rights of creditors and ensure fair treatment in financial dealings.

Other options do not accurately capture the essence of fraudulent conveyance. The transferring of ownership of tangible property can occur for a variety of legitimate reasons that do not necessarily involve deceit. Selling a business to a third party and leasing assets for financial gain may also involve lawful transactions that do not have the element of fraud intended to deceive creditors. Thus, the correct understanding of fraudulent conveyance lies in its focus on the intent behind the transfer of assets.