[gnso-irtpd] Off the cuff draft:

[Holly Raiche]

Normally, I would never quote from Google on matters of law, but it's a lot easier than copying text from text books.  So the concept of bona fide purchasers for value without notice is defined below - and it gives the BFP (for value without notice) the goods as against the former owner. But you are correct in saying that there is still a claim against the person who fraudulently sold the property.

So the question is then what is meant by 'without notice' and what reasonable steps should such purchaser have taken so that they can be said to be 'without notice'.

All good fun, reallly

Holly

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 be the beneficiary of a gift. Even when a party fraudulently conveys property to a BFP (for example, by selling to the BFP property that has already been conveyed to someone else), that BFP will, depending on the laws of the relevant jurisdiction, take good (valid) title to the property despite the competing claims of the other party. As such, recording one's interest protects an owner from losing that interest to a subsequent buyer who qualifies as a BFP. Moreover, some jurisdictions (so-called "race-notice" jurisdictions) require the BFP himself or herself to record in order to enforce his or her rights. In any case, parties with a claim to ownership in the property will retain a cause of action (a right to sue) against the party who made the fraudulent conveyance.

A BFP will not be bound by equitable interests of which he/she does not have actual or imputed notice, as long as he/she has made "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, 35 U.S.C. § 261. Unlike the common law, the statute cuts off both equitable and legal claims to the title.

On 14/01/2014, at 9:09 AM, rob.golding at astutium.com wrote:

> 
>> is talk about the 'innocent third party' who put
>> money down in good faith for something - with compensation for the
>> loser.
> 
> The 3rd-party would have recourse to claim from whomever they paid
> - you can't legitimise the purchase of 'stolen' goods through an 'innocent 3rd party'
> 
> Rob
> 

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