Bona fide purchaser
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| Property law |
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A bona fide purchaser (BFP) — referred to more completely as a bona fide purchaser for value without notice — is a term used in the law of real property and personal property to refer to an innocent party who purchases property without notice of any other party's claim to the title of that property. A BFP must purchase for value, meaning that he or she must pay for the property rather than simply being the beneficiary of a gift. Depending on the laws of the relevant jurisdiction, when a party fraudulently conveys property to a BFP, such as by selling the BFP property that has already been conveyed to someone else, that BFP takes good title to the property despite the competing claims of the other party so long as the BFP properly records the transaction. Other parties with claim to ownership will have a cause of action against the party who made the fraudulent conveyance.
A bona fide purchaser for value without notice will not be bound by equitable interests that he/she does not have actual or imputed notice of, as long as they have taken "such inspections as ought reasonably to have been made" [1].
BFPs are also sometimes referred to as "Equity's Darling." However, as Jeffrey Hackney has pointed out,[2] the title is somewhat misleading; in cases where legal title is passed to a bona fide purchaser for value without notice, it is not so much that equity has any great affection for the purchaser - it is simply that equity refuses to intervene to preserve any rights held by the former beneficial owner of the property. The relationship between the courts of equity and the BFP are better characterised as benign neglect. However, equity still undoubtedly recognises the right of the beneficial owner to claim against the former legal owner where the sale was improper.
In the United States, the patent law codifies the bona fide purchaser rule, . Unlike the common law, the statute cuts off both equitable and legal claims to the title.
[edit] See also
[edit] Footnote
- ^ Kingsnorth Finance Trust Co Ltd v Tizard [1986] 1 WLR 783
- ^ Jeffrey Hackney, Fellow of Wadham College, Oxford, Understanding Equity and Trusts, ISBN 0-00-686072-9
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