The buyer in good faith is the person who acquires an asset registered in a public registry, thinking that the legitimate owner of this asset is the owner indicated in the registry, and when they go to register it, they observe that this is not the case.
In other words, the buyer in good faith is the one who acquires an asset thinking that the seller is the rightful owner because it is listed in the Property Registry. However, this record has not been updated and in reality the rightful owner of the property is someone other than the seller.
To understand what a bona fide buyer is, you have to understand what good faith refers to.
Good faith is a general principle of law that consists of the presumption that a person acts with an appropriate behavior in legal traffic. It is an indeterminate legal concept. This means that it is not defined or regulated, but rather it is a non-specific expected behavior. It refers to acting ethically and with a socially accepted attitude.
In the codes of law, good faith is a behavior that is assumed by the person, and, to affirm that they have acted in bad faith, this attitude must be proven by the other party. Good faith should not be proven.
Buy and sell
The bona fide buyer is often an expression that is also known as a bona fide third-party acquirer. It is commonly used for the sale of real estate registered in the Property Registry.
It may be that the ownership of a real estate has changed ownership, but the Land Registry has not been informed and, therefore, it continues to keep the former owner as the owner of the property.
In this case, the former owner tries to sell the real estate to a third party and this, relying on the registration of the Property Registry, acquires the asset. We assume that the buyer is in good faith by not knowing that the new owner is another person who has not registered their ownership of the property in the Registry.
It is so important to be considered a good faith buyer in these types of transactions that you are protected by law:
The person who had ownership of the real estate, but had not registered its ownership, will lose this property in favor of the purchaser in good faith. That is, even if a good has been bought from a person who did not have the right to sell it, the purchase will be considered valid if it is a buyer in good faith.
Bona fide buyer requirements
The important thing to consider a buyer in good faith is that in the actions he carries out, in his conduct, there is an absence of vices. That is, you do not know that you are acquiring a title that is not valid. There are no vices that invalidate your behavior.
One way in which the law seeks to monitor the absence of defects in the conduct of the buyer is to establish two requirements. You understand the regulation that, if a person performs these two actions, they truly believe that they are making a legitimate transaction:
- Onerous sale of the good.
- Good inscription.
Bona fide buyer example
In order to better understand this concept, we are going to see an example:
A woman sells her cousin a house, a piece of real estate. But he sells it without being the legitimate owner of the property, since he donated it to his daughter. But this daughter never entered the real estate in the public registry.
Even so, the cousin buys the real estate. In order for you to have been a good faith buyer, you would have to show that you were unaware that the real estate was not owned by your cousin but by her daughter. Two requirements that the regulations ask for are that it had been a sale with a market price (and not a simulation) and that they had tried to register the property in the Property Registry.