Bona Fide Purchasers

Bona Fide Purchasers: Overview

A bona fide purchaser (a.k.a. bona fide purchaser for value and without notice) is one who has paid full value for the property and has no knowledge of any outstanding interest held by third parties. In most states, a purchaser must meet these criteria in order to obtain full protection under the recording act. Generally, the purpose for these criteria is to prevent a seller from giving away part or all of his property to another so as to avoid demands of creditors who might otherwise obtain a lien against the property. A bona fide purchaser is essentially protected against any unrecorded equities or interests which the title might have been subject to had the seller/prior owner never conveyed title.


Of course, there are situations in which a person is not a purchaser for value. Two of the most common situations include obtaining title to property by gift deed or by inheritance or devise. With respect to gift deeds, you must be concerned with the possibility of liens for state and federal gift taxes and for unrecorded debts or interests created by the grantor and, therefore, an exception must be made for these liens and interests. If, however, it appears that the conveyance may involve fraud on the part of the grantor with respect to creditors or such conveyance may render the grantor insolvent, the transaction may not be insurable and you should contact Agents National Title counsel immediately.