The opinion of the court was delivered by: Zazzali, J.
On certification to the Superior Court, Appellate Division.
In this case, defendant Arik Zudkewich personally guaranteed two large commercial loans in 1989. Within months he transferred his home, later sold for $1.2 million, to his wife for $1.00. The lender gave notice of default to the primary obligor in December 1994, and judgment was entered in July 1997 against defendant. In April 1998, the creditor sued to set aside the transfer as fraudulent under New Jersey's Uniform Fraudulent Transfer Act (UFTA), N.J.S.A. 25:2-20 to -34. The trial court dismissed that claim as untimely, and the Appellate Division affirmed.
There are two issues presented: (1) whether the four-year UFTA statute of limitations commenced at the time of the transfer or at the time of the judgment; and (2) when could the creditor "reasonably have . . . discovered" the transfer, the event that starts the running of the one-year tolling provision of the statute. We hold that the four-year provision runs from the date of transfer, rather than the date of judgment. SASCO did not file suit within four years of the date of transfer, and therefore does not fall within that provision. We also conclude that a reasonable commercial creditor would have performed an asset search, at the very latest, when it gave formal notice of default to the primary obligor. The interests of justice require that we apply that holding purely prospectively. Therefore, although SASCO did not comply with that rule, we reverse and remand for the trial court to adjudicate SASCO's UFTA claim.
On December 19, 1989, Midlantic Bank, N.A., plaintiff's predecessor-in-interest, loaned $2.9 million to Gateway 195 (Gateway), a partnership formed to develop commercial real estate. Defendant Arik A. Zudkewich was one of Gateway's nine general partners. Two large parcels of commercial real estate in Hamilton secured the loan. In addition, all of Gateway's general partners, including Zudkewich, gave Midlantic personal guaranties. Midlantic subsequently assigned the loan to ALI Inc. (ALI).
On December 6, 1994, ALI gave Gateway formal notice that it considered Gateway in default and demanded immediate payment. Later that month, ALI filed a complaint in the Law Division against Gateway and eight of the general partners, Zudkewich included. In March 1995, Gateway declared bankruptcy. ALI, Gateway, and five of the eight general partners named in the lawsuit, not including Zudkewich, entered into a settlement agreement. That settlement was coordinated with the resolution of the bankruptcy proceeding. Gateway agreed to transfer the two Hamilton properties to ALI and sell four other properties to reduce the outstanding balance on the loan. Gateway was unable to pay the full balance, so ALI continued with the Law Division action against Zudkewich and the two other partners who did not settle. When it appeared that ALI was going to obtain a default judgment against Zudkewich, ALI ordered an investigative search on his assets. In early August 1997, ALI obtained the judgment in the total amount of $1,300,347.50. At about the same time, ALI transferred its interests in the litigation to plaintiff, SASCO 1997 NI, LLC, (SASCO),*fn1 for a nominal fee.
The asset search disclosed that on May 1, 1990, a few months after Zudkewich personally guaranteed the loan, he transferred his interest in the marital residence to his wife, Rochelle, for $1.00. The home was later sold for $1.2 million.
Zudkewich and Rochelle recorded the deed of transfer on May 8, 1990, and the property was sold in 1992. They moved into a new home in Millburn. That home was later sold for a profit of approximately $1.5 million, and the Zudkewiches then moved into a Short Hills home. Rochelle alone was named on the title of the Millburn and Short Hills properties.
On April 23, 1998, SASCO filed a complaint against Zudkewich and Rochelle, alleging a violation of the UFTA, fraud, conversion, unjust enrichment, and requesting imposition of a constructive trust. Defendants moved to dismiss, contending that the UFTA's statute of limitations barred SASCO's claims. The Law Division granted the motion, and SASCO appealed. The Appellate Division affirmed in an unpublished opinion. We granted certification, 163 N.J. 397 (2000), and allowed the New Jersey Bankers Association, Summit Bank, and Valley National Bank to appear as amici curiae.
In 1984, the National Conference of Commissioners on Uniform State Laws (Commissioners) approved the UFTA. At least thirty- nine states and the District of Columbia have since adopted the UFTA, either in whole or in part. In 1988, New Jersey enacted the UFTA, L. 1988, c. 74, § 1, to replace this State's Uniform Fraudulent Conveyance Act (UFCA), which had been the law since 1919. Flood v. Caro Corp., 272 N.J. Super. 398, 403 (App. Div. 1994). Prior to the UFTA "[s]tatutes of limitations applicable to the avoidance of fraudulent transfers and obligations var[ied] widely from state to state and [were] frequently subject to uncertainties in their application." Uniform Fraudulent Transfers Act comment 2 on § 9, 7A U.L.A. 643, 666 (1984). To remedy those inconsistencies, the Commissioners recommended the enactment of a uniform statute of limitations. Ibid. The Commissioners intended section 9 of the UFTA to "mitigate the uncertainty and diversity that have characterized the decisions applying statutes of limitations to actions to fraudulent transfers and obligations." Ibid. New Jersey accepted that recommendation and enacted Section 9 essentially verbatim. L. 1988, c. 74, § 1 (codified at N.J.S.A. 25:2-31). That section provides:
A cause of action with respect to a fraudulent transfer or obligation under this article is extinguished unless action is brought:
a. Under subsection a. of [N.J.S.A.] 25:2-25, within four years after the transfer was made or the obligation was incurred or, if later, within one year after the transfer or obligation was or could reasonably have been discovered by the claimant;
b. Under subsection b. of [N.J.S.A.] 25:2-25 or subsection a. of [N.J.S.A.] 25:2- 27, within four years after the transfer was made or the obligation was incurred; or
c. Under subsection b. of [N.J.S.A.] 25:2-27, within one year after the transfer was made or the obligation was incurred. ...