Question about what constitutes a bfp

[nickjames]

What is the name of your state? TX

I am an ip attorney who know absolutely nothing about real estate law and was hoping for some feedback from other attorneys. Suppose a piece of real property is acquired through probate by Party A. Party A subsequently sells the property to Party B, a close relative. The problem is that during the probate proceeding there was a will contest filed by Party C that was inadvertently misplaced by the clerk of the court. As a result, Party A obtained the property by default through a standard muniment of title proceeding. Party C files a bill of review challenging the default order due to the court's negligence in misplacing the will contest (Party A and Party B are named defendants in the bill of review). My question is, if Party B KNEW about the will contest, is he considered a bona fide purchaser if he purchased the property for value? If he is in fact a bfp, would that mean that the only recourse would be against Party A? FYI, there is a lis pendens currently in place to prevent Party B from transferring the property, but there was not one in place when A sold to B. Thanks for your help.

[seniorjudge]

Q: My question is, if Party B KNEW about the will contest, is he considered a bona fide purchaser if he purchased the property for value?

A: No. Unclean hands and all that stuff.



Q: If he is in fact a bfp, would that mean that the only recourse would be against Party A?

A: Possibly, but if I were representing C, I would sue A and B.

[seniorjudge]

BONA FIDE Any genuine offer, made without intent to defraud or deceive.


The transaction cannot pass even this very elementary test set out on this website:

[url]http://www.hunterrealestategroup.com/RealEstateGlossary#B[/url]

I am certainly not vouching for that website in any way.

[nickjames]

Thanks seniorjudge. It seems to me that is would be very difficult to prove Party B knew anything. He could just rely on the muniment of title granted by the probate court and argue that the court screwed up and that there was no way of knowing of the will contest. So am I correct in thinking that this would be an issue of fact to be determined by judge or jury rather than one of law? In other words, would I just have to question this guy and try to prove that he was a knowing participant in the fraudulent transfer? The reason I ask is that I fear that all Party B has to do as a matter of law is justify his "due diligence", which in this case is the muniment of title.

[seniorjudge]

Yes, it's a question of fact.

And the fact that A and B are related, then that makes it even more suspicious.