Cal. LAB § 3720.2 — California Code / Code lab / Division 4 / Part 1 / Chapter 4 / Article 2 / Section 3720.2
Section 3720.2
Status: in_force

(a) In a claim in which the uninsured employer or a substantial shareholder, as determined pursuant to this article, has caused to be recorded in a county a vesting deed conveying an ownership interest in real property after the date of the employee’s injury and prior to the recording of a certificate of lien in the county by the director pursuant to Section 3720, and provided that such property has not subsequently been transferred to a bona fide purchaser, the director may determine according to the evidence available to the director whether the transferor of such real property intended to retain a beneficial interest in the real property, such that a resulting trust for the benefit of the uninsured employer or substantial shareholder was created. A prima facie finding that the transaction created a resulting trust for the benefit of the uninsured employer or substantial shareholder may be made when the director determines that there is sufficient evidence to show either of the following circumstances are present:

(1) The recorded vesting deed indicates thereon that the transfer was made as a gift or that no transfer tax to the county was paid.

(2) The transferor made the transfer with actual intent to hinder, delay, or defraud collection of reimbursement for funds paid by the Uninsured Employers Benefits Trust Fund to or on behalf of an injured worker. A finding made pursuant to this paragraph may be made when at least three or more of the following circumstances are present:

(A) The transfer was to a personal or business associate or a relative by blood, affinity, or marriage of the transferor.

(B) The transferor maintains the real property as a place of residence or business after the transfer.

(C) The transferring parties did not employ an escrow or title company to close the transaction transferring the real property.

(D) The value of the consideration received by the transferor was not reasonably equivalent to the value of the real property transferred.

(E) The transferor failed to attend scheduled hearings and trials of the appeals board after the transfer.

(F) The transferor owns legal title to no other real property in the county.

(b) When the director determines pursuant to subdivision (a) that a transfer of real property by the uninsured employer or a substantial shareholder created a resulting trust for the benefit of such transferor, a certificate of lien recorded by the director pursuant to Section 3720 shall attach to that resulting trust in the property and shall constitute a valid lien against the property in favor of the director in the same manner as if the transfer had not occurred.

(c) When the director determines pursuant to subdivision (a) that a transfer created a resulting trust for benefit of the transferor, the director shall mail written notices of the prima facie determination of said resulting trust to the transferor and transferee at their addresses as shown on the recorded vesting deed, the official address record of the appeals board, and to any other more recent addresses the director may have. The notice shall advise the transferring parties of their right to appeal the finding, and that a lien may record and attach against the subject real property stating therein that, “THE DIRECTOR HAS MADE A PRIMA FACIE DETERMINATION PURSUANT TO LABOR CODE SECTION 3720.2 THAT THE TRANSFEREE, [FIRST AND LAST NAME], HOLDS TITLE TO THE REAL PROPERTY AT [STREET ADDRESS, CITY AND PARCEL NUMBERS] ON BEHALF OF THE TRANSFEROR, [FIRST AND LAST NAME], IN A RESULTING TRUST” in bold and uppercase letters on the certificate of lien.

(d) A person aggrieved by a prima facie finding of the director pursuant to subdivision (a) that the transferor of the property intended to retain a beneficial interest, such that a resulting trust was created, may request a hearing on the finding by filing a written request for hearing with the director. The director, through a hearing officer appointed by the director, shall hold a hearing on the matter within 20 days of the receipt of the request for hearing and shall mail a notice of time and place of hearing to the person requesting the hearing at least 10 days prior to the hearing. The hearing officer shall hear and receive evidence, and within 10 days of the hearing, file findings on whether there is sufficient evidence to constitute a prima facie case that the transfer of real property is subject to a resulting trust. The hearing officer shall serve with the findings a summary of evidence received and relied upon and the reasons for the findings. A party may at their own expense require that the hearing proceedings be recorded and transcribed.

(e) A party aggrieved by the findings of the hearing officer may within 20 days apply for a writ of mandate to the superior court. The venue shall lie in the county in which the real property is located.

(f) This section does not affect the interests, priorities, and ownership rights of bona fide encumbrancers and purchasers.