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Personal Property - Bona Fide Purchasers

title seller buyer voidable

A basic common-law principle is that an individual cannot pass a better title than she has, and a buyer can acquire no better title than that of the seller. A thief does not have title in stolen goods, so a person who purchases from the thief does not acquire title.

A bona fide purchaser is an individual who has bought property for value with no notice of any defects in the seller's title. If a seller indicates to a buyer that she has ownership or the authority to sell a particular item, the seller is prevented (estopped) from denying such representations if the buyer resells the property to a bona fide purchaser for value without notice of the true owner's rights. At common law, such an ESTOPPEL did not apply when an owner brought an item for services or repairs to a dealer in that type of goods and the dealer wrongfully sold the chattel. The bona fide purchaser, however, is now protected under such circumstances by the UNIFORM COMMERCIAL CODE (UCC).

A buyer who induces a sale through fraudulent representations acquires a VOIDABLE title from the seller. A voidable title is one which may be vacated by the seller, upon discovery of the buyer's FRAUD, at his option. The seller has the authority to transfer a good title to a bona fide purchaser for value without notice of the outstanding EQUITY. The voidable title rule is only applicable in situations where the owner is induced to part with title, not merely with possession, as a result of fraud or deception.

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