In the world of title abstracts, the most common forms of ownership are sole ownership and concurrent ownership. Others forms of ownership do exist, however, and understanding them is essential. The form
of ownership of any given property determines the number of parties holding interest to the title, the number of risks associated with a title, and how interest is passed from one party to another. Today we’ll introduce the concept of a bona fide purchaser and explore some different forms it can take.
What is a Bona Fide Purchaser?
The exact conditions that define a bona fide purchaser vary according to judicial dictates and state laws. The general definition is: any legal entity or individual that acquires interest in a property without notice of any outstanding unrecorded encumbrances, claims, defects or liens. A thorough title abstract will establish whether or not the bona fide purchaser holds claim to the interest stated within the public records.
Types of Bona Fide Purchasers
- Business Trusts – Unincorporated business organizations in which the trustees have interest in a property are called business trusts. Usually a business trust may not hold, convey, encumber, or acquire title to real property under its own name. Transfers and transactions are generally executed in name of the trustees. A title search will ensure that all transactions in a chain of title were executed by the correct individual/trustee.
- Corporations – Corporations are legal entities under state law, and under statute they may hold and transact property much like an individual would. A title search will review the Articles or Certificates of Incorporation, the proof of good standing, judicial proceedings, as well as any Federal or State laws that limit the corporation’s right to convey or acquire real property.
- Government Entities – Even government entities must conduct real estate transactions according to certain statutes. These vary depending on the location of the property and the specific laws and provisions governing the entity. A title search will determine if the entity has the right to hold the title, if the property was sold to the highest bidder, if the transaction was advertised properly, and if the applicable instrument was used in a conveyance—among other considerations.
There are other kinds of bona fide purchasers, including foreign aliens, convicts, and minors. For questions about any bona fide purchaser, contact Punctual Abstract.
Commercial and Residential Title Abstracts from Punctual Abstract
Punctual Abstract is a national abstracting company with a local tough. We provide a one-stop solution for full title abstracts, current owner searches, deed preparation, document filing/retrieval, and many other value-adding services. For more information, please visit our homepage or contact us directly at our Harvey, LA office.