Badges of Fraud — Suspicious facts or circumstances that are evidentiary indicators of fraudulent intent. One or more of these “red flags” can form the prima facie case needed to raise a presumption of fraud.
The evidentiary burden shifts once badges of fraud are demonstrated.
Suspicious circumstances which our courts may characterize as “badges of fraud” in real estate deals include:
- 1) Secrecy surrounding a transaction
- 2) Cash payments were made
- 3) No change of possession occurred after the conveyance
- 4) Transfer to non-arm’s-length person
- 5) The transferor has few remaining assets
- 6) The transfer was effected with unusual haste
- 7) Grossly inadequate consideration was paid
- 8) A benefit was retained by the transferor under the settlement
- 9) The transfer was made in the face of potential litigation
- 10) Lack of accurate documentation supporting the transaction
Conte (Executrix and trustee of) v. Alessandro, 2002 CanLII 20177 (ON SC)
Law Society of Upper Canada v. Jonathan Howard Marler, 2010 ONLSAP 29 (CanLII)