A bona fide purchaser or BFP is someone who purchases something in good faith, believing that he or she has clear rights of ownership after the purchase and having no reason to think otherwise. In situations where a seller behaves fraudulently, the bona fide purchaser is not held responsible. Someone with a conflicting claim to the property under discussion would need to take it up with the seller, not the purchaser, and the purchaser would be allowed to retain the property.
In order to be considered a bona fide purchaser, someone needs to actually pay for the property in question; she or he cannot be the beneficiary of a gift or legacy. Furthermore, the BFP cannot have received notice of a conflicting claim or been reasonably expected to be aware of a problem with the title to the property. The bona fide purchaser is, in other words, innocent, even if the transaction was fraudulent in nature.
If the real owner of the property or someone with a conflicting claim of another nature surfaces after the transaction is complete and the bona fide purchaser can demonstrate that she or he was unaware of the situation, he or she is allowed to retain the title to the property. The person with the conflicting claim must claim damages from the seller in a civil suit in court, and there may be cases in which sellers can face criminal fraud penalties as well.
Although the bona fide purchase is allowed to retain the title, there are situations in which people who purchase property in such transactions offer to sell it back to the original owner. The original owner can buy the property back and file suit against the fraudulent seller to recover the funds used for the purchase. However, people cannot be compelled to sell such property and there may be cases in which someone with a conflicting claim will have to accept a settlement payment from the seller with no change of recovering the property itself.
There may be cases in which someone claims to be a bona fide purchaser, but in fact was aware of problems with the transaction and chose to proceed anyway. If this can be proved in court, the purchaser will forfeit the property to the rightful owner and cannot receive compensation for the funds paid at the time of purchase because he or she participated in the fraudulent transaction, rather than being an innocent victim.
