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bona fide purchaser

A bona fide purchaser is someone who exchanges value for property without any reason to suspect irregularities in the transaction. By definition, a bona fide purchaser cannot have actual or constructive notice as to defects in the seller’s right to transfer title to the property. 

If a buyer is fully aware that the seller is selling stolen property, then that buyer has actual notice and cannot claim to be a bona fide purchaser. If a third-party registered the property under the state’s recording statute , a buyer has constructive notice of defects in a seller’s title and also cannot claim to be a bona fide purchaser.  

Status as a bona fide purchaser provides a set of protections under property law. For example, a bona fide purchaser who buys from a seller with a defect of title (whether that’s by fraud or mistake) is nonetheless able to keep the property if a third-party files a claim of ownership. As a result, whether or not a party qualifies as a bona fide purchaser is often the subject of litigation .

[Last reviewed in June of 2022 by the Wex Definitions Team
]

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