Also known as: good faith purchasers for value · good-faith purchaser for value · bona fide purchaser · BFP · good faith buyer
Written by attorneys · grounded in primary & secondary sources — see below
A purchaser who acquires an interest in property in good faith, for valuable consideration, and without notice of prior claims or defects in title. The status shields the purchaser from unrecorded or defective prior interests under recording acts and related doctrines that allocate priority among competing claimants.
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Guardian Insurance purchased a warehouse from Granite Holdings after searching the county records and finding no encumbrances. An earlier unrecorded deed from Granite Holdings to Gordon Gray existed but had never been filed. Guardian Insurance paid full market value and recorded its deed the same day. Under the applicable race-notice statute Guardian Insurance prevails because it took without notice and recorded first.
Greta Goldstein bought vacant land from Gabriel Gonzalez after seeing a neighbor using a path across the parcel. The neighbor held an unrecorded easement. Greta Goldstein paid value and recorded promptly, yet the court denied her priority because the visible use supplied inquiry notice of the prior claim.
Gwen Gallagher obtained a painting from Grace Gupta by misrepresenting her identity and immediately resold it to Gateway Bank for cash. Gateway Bank had no knowledge of the fraud. When the true owner sued for conversion, Gateway Bank prevailed as a bona fide purchaser for value.
Giana Greco and Great Lakes Steel signed a contract containing a mutual clerical error about payment timing. Before either party sought reformation, Giana Greco assigned the contract to Granite Holdings, which paid value and had no notice of the mistake. The court refused reformation because it would unfairly affect the rights of the good faith purchaser for value.
A forger executed a deed purporting to convey land owned by Gordon Gray to Gwen Gallagher. Gwen Gallagher paid value, had no notice of the forgery, and recorded her deed. Under the jurisdiction's recording act Gwen Gallagher obtained protection against Gordon Gray's claim to the extent the statute shields subsequent bona fide purchasers.
Greta Goldstein contracted to buy land from Gabriel Gonzalez under an installment agreement and paid forty percent of the price before discovering an earlier unrecorded contract held by Grace Gupta. The court awarded title to Grace Gupta but granted Greta Goldstein an equitable lien for the amount already paid, treating her as a bona fide purchaser only to that extent.
The purchaser must take in good faith, give valuable consideration, and lack actual or constructive notice of the prior unrecorded interest at the time of acquisition. Failure on any element prevents the purchaser from prevailing over the earlier claimant.
A forged deed is void and conveys no title from the true owner. In some jurisdictions a subsequent purchaser who takes without notice and records may still receive statutory protection against the true owner's claim depending on whether the jurisdiction follows a race, notice, or race-notice statute and how chain-of-title rules apply.
…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 providing…
…transaction, and particularly the more he controls or participates or becomes involved in it, the less he fits the role of a good faith purchaser for value
…the directors pledged themselves to vote for certain people as officers of the corporation] mean little. Possible harm to bona fide purchaser
…therefore unenforceable. Where a breach of fiduciary obligation occurs, the contract entered is valid and enforceable where the bona fide purchaser
…light of the “disposition or use” in fact “proposed,” not the various dispositions or uses that might have been proposed. Cf. BFP
The purchaser receives protection only to the extent of payments already made. A court may award the land to the prior claimant while granting the installment purchaser an equitable lien securing recovery of the amount paid.
Inquiry notice arises when facts known to the purchaser would prompt a reasonable person to investigate further. A purchaser charged with inquiry notice is deemed to have notice of the prior claim and therefore cannot satisfy the no-notice requirement of the recording act.