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.

Scroll to Top