Bona Fide Purchaser

A purchaser that acquires property without “notice” of any outstanding claims held against the property by third parties and that gives value for the property. “Notice” includes actual notice, notice of facts that should have triggered further inquiry by the purchaser, and constructive notice.

The trustee (and, therefore, the debtor in possession) has the powers of a bona fide purchaser of real property and may avoid the transfer of property or an obligation incurred by the debtor (including liens against the debtor’s property) that would be voidable by a purchaser of real property that obtained and perfected its status as a bona fide purchaser as of the time of the bankruptcy filing.

Bankruptcy Code § 544(a)(3). See also Avoidance Actions, Hypothetical Lien Creditor, Strong Arm Powers.

Email Term