Also known as: good faith purchasers · good-faith purchaser · good-faith purchasers · bona fide purchaser · BFP
Written by attorneys · grounded in primary & secondary sources — see below
A purchaser who acquires property for value in good faith and without notice of prior claims or defects in title.
Horizon Retail REIT paid fair market value for a shopping center and took a warranty deed with no notice of an earlier unrecorded construction financing claim held by the Carter Family Trust. Horizon then leased space to Urban Threads LLC. The trust sued to foreclose and collect rent. Horizon's status as a good faith purchaser cut off the trust's claim, leaving Horizon with superior title to the premises and the rents.
Gavin Grant bought vacant land from a seller who had previously conveyed an unrecorded interest to Greta Goldstein. Grant saw signs of prior use during inspection but recorded first under the state's race-notice statute. Goldstein sued to quiet title. Because Grant had inquiry notice, he was not a good faith purchaser and Goldstein's interest prevailed.
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Genesis Pharmaceuticals obtained possession of laboratory equipment by fraud from Grove Manufacturing. Genesis then sold the equipment to Guardian Insurance, which paid value and had no notice of the fraud. Grove sued Guardian for conversion. Guardian's status as a good faith purchaser barred Grove's recovery.
Gordon Gray and Gina Griffin signed a contract containing a mutual mistake about the property description. Gray later sought reformation. A bank that had already taken a mortgage on the property as a good faith purchaser for value intervened. The court refused reformation to the extent it would prejudice the bank's recorded interest.
A forger executed a deed purporting to convey Golden Gate Logistics' warehouse to Gabriella Gomez, who paid value, lacked notice, and recorded. The true owner sued to recover the property. Under the applicable recording act Gomez qualified as a good faith purchaser and obtained protection against the true owner's claim.
Gary Goldman entered an installment land contract and paid half the price before the seller conveyed the same parcel to a prior unrecorded claimant. Goldman sued for specific performance. The court awarded the land to the prior claimant but granted Goldman an equitable lien for the amount already paid because he qualified as a good faith purchaser to that extent.
The purchaser must take for value, in good faith, and without actual or constructive notice of the prior unrecorded interest. A purchaser with inquiry notice fails the test and cannot claim priority.
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Yes. An equitable interest is subordinate to a later legal title acquired for value without notice of the equitable claim. The purchaser's legal title cuts off the prior equity.
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In some jurisdictions the purchaser may still prevail under the recording act if the purchaser took without notice and recorded, depending on whether the statute is race, notice, or race-notice.
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The purchaser receives protection only to the extent of payments made. The court may award the land to the prior claimant but grant the installment purchaser a lien for amounts already paid.
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…ed. 1971) § 2-403:6 at 41 ( Anderson ). Nonetheless, the U.C.C. permits a person with voidable title to transfer good title to a good faith purchaser for value in certain circumstances. N.J.S.A. 12A:2-403(1). If the facts developed at trial merit application of that section, then Frank may have transferred good title to Snyder, thereby…