What Is an Asset Investigation? What It Can Lawfully Establish, and When to Commission One

What an asset investigation is, and what it is not

An asset investigation is a structured inquiry into what a person or a company owns, how each holding is titled, what is already pledged against it, and what has been transferred, to whom and when. It is built from public records and, where litigation exists, from the formal process the court provides. It is not built from the subject's description of their own affairs, which is usually the thing being tested.

It is distinct from an asset search in the sense the market often sells one: a database report run against a name, returning whatever an aggregator has matched to it. That report is a starting point. An investigation reconciles identity on identifiers rather than names, reads each record where it was filed, establishes whether it is still current, and states plainly what could not be established. The difference matters most when the findings will be relied on in a filing, a negotiation or a hearing.

It is also records work. It does not involve contacting the subject, and it does not involve monitoring them.

The matters that call for one

The method is the same across matters. What changes is the question the work has to answer, and how much time there is to answer it before the subject acts.

• Judgment enforcement — a creditor holds a judgment and needs to know what the debtor owns that the law will let it reach. This is a frequent commission, and the post-judgment mechanics are set out in asset tracing for judgment enforcement.
• Pre-litigation solvency — counsel needs to know, before filing, whether a judgment against this defendant could be collected at all. The full pre-filing inquiry is described in pre-litigation due diligence.
• Pre-deal verification — a lender, investor or buyer is relying on a principal's stated net worth, a personal guarantee or a counterparty's holdings, and needs that statement tested against the record before signing. That work sits within investigative due diligence more broadly.
• Fraud recovery — funds have been diverted, and the question is what they became: real property, titled assets, interests in entities, or transfers to relatives and associates. The first weeks of that work are described in the first thirty days of a corporate fraud investigation.
• Cross-border matters — the value has left the country, or the subject's holdings sit partly abroad. The sequencing changes considerably, as set out in inside a cross-border asset trace.
• Bankruptcy and receivership — trustees, receivers and creditors' committees testing a debtor's schedules against what the record actually shows.

What it can lawfully establish

Most of what matters in an asset question is on the public record somewhere, because the law requires it to be. Title to land is recorded to protect the owner, security interests are filed to establish priority, and companies register in order to exist. Read at their source, those records let an investigation establish the following, each with a document and a date behind it.

• Ownership of record — real property, titled vehicles, vessels and aircraft, and interests in entities where a filing names the holder
• Encumbrances and priority — mortgages, liens, judgments and security interests, and the order in which they rank
• Movement — transfers of title, the dates they were recorded, the parties to them, and the consideration stated
• Structure — the entities a subject controls or is connected to, with their officers, agents and formation dates
• Claims — litigation the subject is party to, judgments owed by and to them, bankruptcies and tax liens

Where the lawful record stops

On bank accounts, an investigator can sometimes lawfully identify which institutions a subject uses — from recorded mortgages and their lenders, UCC filings, litigation exhibits and closing documents — but never balances or account numbers: obtaining a bank's customer information by pretext is prohibited by the Gramm-Leach-Bliley Act, and the accounts themselves are reached by subpoena or garnishment.

The other limits are of the same kind. Brokerage and retirement account balances, individual tax returns, and the contents of private accounts, devices and communications are not held in any public registry; they appear in the record mainly where they have been disclosed in a filing, such as bankruptcy schedules or a public company's executive-compensation tables, and are otherwise reached, if at all, through legal process.

Personal information in motor-vehicle records is released only for the uses the Driver's Privacy Protection Act (18 U.S.C. § 2721) permits. Where findings will be used to decide credit, employment, insurance or tenancy, the Fair Credit Reporting Act may govern the whole engagement. None of this prevents a useful answer; it marks the point at which the investigation stops and formal discovery takes over.

Absence is a limit too. A clean result establishes that nothing is recorded in the places searched, not that nothing exists, and the gap widens where holdings sit behind nominees, trusts or foreign entities. A competent report says which of the two it is reporting.

This article is informational and is not legal advice; how these rules apply to a particular matter is a question for counsel.

The records it is built from

Domestic asset work runs on a defined set of public registries, and each answers a different question.

• Land records (county recorder or register of deeds) — who holds title, how it passed to them, and what is recorded against it.
• UCC financing statements (Article 9) — which lenders claim a security interest in a business's personal property, and who filed first, in the state's central filing office, usually the secretary of state.
• Entity filings — state registrations, the people and agents named in them, and, for public companies, SEC filings on EDGAR.
• Federal and state court records — PACER for federal civil and bankruptcy dockets, state court indexes for judgments, and the exhibits filed in them, which often say more about a subject's finances than anything published.
• Aircraft and vessel registries — the FAA Civil Aviation Registry for aircraft, and the U.S. Coast Guard's National Vessel Documentation Center and state titling offices for vessels, each with its own record of liens and mortgages.
• Motor-vehicle records — state titles and registrations; the personal information in them is released only for the permissible uses listed in the Driver's Privacy Protection Act, 18 U.S.C. § 2721.
• Tax liens, licenses and intellectual property — federal and state tax liens recorded against a subject, professional and business licenses, and patent and trademark assignments recorded with the USPTO.

Reading the records together

No single record class answers an asset question. What makes the record useful is reading it in combination: a deed transferring a home to a newly formed LLC means little on its own, and a great deal when the LLC's formation date, its registered agent and the date the subject was served all fall within the same month.

The deliverable should be organized around the question rather than the databases searched: what the subject owns of record, what of it is encumbered and by whom, what has moved and when, which institutions and third parties the record points to, and what could not be established and why. Every finding carries its source, the date of the record and the date it was retrieved, so that it can be re-examined and, where needed, relied on in a proceeding.

The last of those elements is the one most often missing. A report that lists twelve properties without saying which are mortgaged to their full value, or that reports nothing found without saying where it looked, invites a decision the record does not support.

When to commission one

Timing is the variable that most changes the outcome, because assets move once a subject knows a claim is coming. Records work does not alert the subject; legal process such as a subpoena or a debtor's examination does, which is one reason to finish the records work first. The practical points at which to commission an asset investigation are these.

• Before filing suit, while the decision to sue is still open and the defendant has not been alerted
• Before accepting a personal guarantee, extending credit against a stated net worth, or closing with a counterparty whose holdings matter to the deal
• On entry of judgment, before the debtor's examination, so that the questions are asked by a creditor who already holds part of the answer
• As soon as a diversion of funds is suspected, and before any demand is sent that could prompt the subject to move what remains

Scoping it: when it adds little, and what to ask a provider

It is not always worth commissioning. Where the sum at stake is small relative to the cost of enforcement, or the counterparty's solvency is already a matter of audited public filing, an investigation adds little, and saying so at scoping is part of a competent firm's job.

Two questions are worth putting to any provider of asset investigation services before engaging. First, how bank-account information will be handled; the only acceptable answer is that it will be reached through legal process and not otherwise. Second, whose license the work will run under. Private investigation is regulated state by state: Fortaris is licensed as a Private Investigator in Michigan (License #3701207862) and works in other states through vetted, appropriately licensed specialists, and the answer from any firm should name the license that applies where the work is done.