In property law, a bona fide purchaser, also commonly referred to as BFP, is a person who has purchased an asset with a stated value (which includes negotiable instruments such as a promissory note or bond), innocent of any fact which would cast doubt on the right of the seller to have sold the asset in good faith. A purchaser can only acquire land free from prior equitable interests if they are bona fide in their purchase, pay a fair and full amount, and take without notice of the equitable interest.
Determining BFP is important, as it establishes the true owner of the claim to title. The purchaser must have paid a fair price for the property and have received the asset in the normal course of business. If you are planning to purchase an asset of value, make sure you have a property lawyer read over the documents to ensure you are protected.
Property and the Torrens System
There are different schemes under each Australian jurisdiction of regulating property rights. Despite the varying schemes, the substantive effect of each legislation in each respective jurisdiction is quite similar. For example, in New South Wales, the relevant Act is the Real Property Act 1900 (NSW) (RPA) and in particular sections 42(1), 100(1) and 118(1) of the RPA. Property legislation in all states is grounded upon the Torrens principles of registration of title. The Torrens system is founded upon a central register of all land in the state and the register must show the owner of the land. This system was devised to reduce fraud relating to land due to the falsification of title deeds.
Notice and Defence
A bona fide purchaser usually is deemed to know of any interest in a registered asset, as registration of the interest places purchasers on notice of any prior registered interests. Deferment will take place where a later interest in an asset is that of a bona fide purchaser for value without notice of the earlier interest.
A bona fide purchaser for value without notice (often abbreviated as BFPFVWN) is a defence available to those who acquire title to property without actual notice, constructive or imputed notice of adverse title to the goods and for valuable consideration.
LegalVision can assist you with property and estate law. LegalVision has a team of great contract lawyers who can assist you. Please call our office on 1300 544 755 and our Client Care team will happily provide you with an obligation-free consultation and a fixed-fee quote.