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Good Faith Purchaser — Real Estate

Real estate law and transactions can be complicated. Although title insurance and title companies primarily exist to ensure that a purchaser is obtaining “clean title,” mistakes happen. What happens when someone purchases real estate with the understanding that no liens or claims exist a given parcel of land, and then it later turns out there there was such a lien or claim? Does the lien/claim survive and the purchaser is responsible? Is the claim extinguished?

Although it depends on the nature of the transaction, and on the nature of the lien, such a purchaser may qualify as a  bona fide purchaser under the law. A bona fide purchaser taken an interest in real property free of prior, unrecorded interests when three requirements are met: (1) the purchaser tendered sufficient consideration, (2) had no notice of outstanding rights of third-parties, and (3) acted in good faith. Johnson v. Stull, 303 S.W.2d 110, 118 (Mo. 1957). The underlying policy behind the doctrine is that a good faith purchaser for value who acted honestly shouldn’t suffer adverse consequences.

Contact us with questions regarding bona fide purchasers for value, real estate, or other related matters.