Also known as: innocent purchasers for value without notice · bona fide purchaser · BFP · good faith purchaser
Written by attorneys · grounded in primary & secondary sources — see below
A purchaser of property who acquires title for valuable consideration in good faith and without actual or constructive notice of any prior adverse claims. Such a purchaser prevails over earlier unrecorded interests under applicable recording statutes.
Horizon Retail REIT purchased a shopping center from MetroMall Corp. for fair market value after a title search revealed no encumbrances. The Carter Family Trust held an earlier unrecorded equitable interest arising from construction financing. Horizon took without notice of the trust's claim. Horizon therefore holds superior title to the property and the right to collect rents from tenant Urban Threads.
William A. Horvath acquired land from a grantor who had previously conveyed an interest to the Sabos. Horvath paid value but possessed facts that would have prompted a reasonable buyer to inquire further into the prior claim. Because Horvath had inquiry notice, he does not qualify for protection and the earlier interest prevails.
Select any source to read its text and confirm it supports the definition.
A seller obtained possession of a painting through fraud and then sold it to a buyer who paid value and had no notice of the fraud. The original owner may recover the painting from the buyer only if the buyer fails to meet the requirements of a bona fide purchaser. The buyer who satisfies those requirements takes free of the owner's claim.
A forger executed a deed purporting to convey land owned by the true owner. The forger then conveyed to a buyer who paid value, recorded first, and had no notice of the forgery. In a jurisdiction applying a notice or race-notice statute, the buyer may be protected against the true owner's claim depending on how the recording act treats the void deed.
Seth paid a substantial portion of the purchase price under an unrecorded installment land contract and resided in the home. Sterling Realty later purchased the same property for value without notice of Seth's interest. A court may award title to Sterling Realty but grant Seth a lien for the amount already paid.
Georgia O'Keeffe's paintings were stolen decades earlier and eventually acquired by a gallery owner who paid value and had no notice of the theft. O'Keeffe later discovered the location of the works. The gallery owner's status as an innocent purchaser for value without notice affects whether the statute of limitations bars O'Keeffe's replevin action.
The purchaser must pay valuable consideration, act in good faith, and lack actual or constructive notice of any prior unrecorded interest at the time of acquisition. Failure to meet any element prevents protection under recording acts.
A purchaser who has facts that would lead a reasonable person to inquire further into possible prior claims is charged with inquiry notice. That purchaser cannot claim protection as an innocent purchaser for value without notice.
Yes. An equitable interest is subordinate to a later legal title acquired for value without notice of the earlier claim. The purchaser's legal title cuts off the prior unrecorded equitable interest.
A court may award title to the later purchaser for value without notice but grant the installment buyer a lien on the property equal to the amount already paid.
…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…