What is a "bona fide purchaser"?

A "bona fide purchaser" is defined as a buyer who purchases property in good faith and without notice of any existing encumbrances or claims against the property. This means that the purchaser is unaware of any legal claims, liens, or other rights that others may hold, which could affect their ownership of the property.

The significance of this term lies in the legal protections it affords to such buyers. If a bona fide purchaser acquires property without knowledge of encumbrances, they are generally protected from those encumbrances after the transaction is completed. This protection encourages fair trade by ensuring that buyers can rely on the integrity of their purchase.

In contrast, a buyer who is aware of existing encumbrances does not qualify as a bona fide purchaser, because their knowledge could imply an acceptance of those claims. A buyer with legal representation could still be informed of encumbrances and would not necessarily qualify as bona fide unless they were also unaware of any issues related to the property's title. Lastly, a buyer who acts on behalf of others might handle the transaction for someone else, yet that doesn't inherently ensure they are free from knowledge about existing encumbrances, and thus they wouldn't fit the criteria of a bona fide purchaser without that lack of knowledge.