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Doctrine of Bonafide Purchaser

As the name suggests this topic relates to the rights and obligations of a person who entered into transaction of purchase of a property  in good faith this means that at the time of entering into an agreement the person was unaware of the objects inherent thereto. This Doctrine is governed by the transfer of Property act 1882.

Important sections :

1) Section 41 - Three conditions for invoking this provision are :

  • Person who sold the property must be an ostensible owner (a person who is not the real owner of the property)
  • By consent implied or express.
  • Buyer acted in good faith.
  • Transaction takes place for a due consideration.
2) Section 43 - Stipulates an burden upon the bonafide purchaser:
  • Finding title by estoppel : Suppose during lifetime of a father, son sold his property to X and later the father died.  Then in case X upon due-diligence new the defect earlier then X will not be protected, otherwise he will be protected.
3) Section 51 - this section says that in case a buyer purchased a property with defective title, and then he made some improvements upon the same property in good faith, then he can demand compensation from the actual owner for the improvements he has made.

4) Section 53 - In case the borrower tries to sell his property, then the creditors may file a suit seeking declaration that the sale is voidable as the same has made just to delay the payment due to them. For doing this creditor has the following two options :
  •  Can go for setting aside the sale deed, or
  • Can during the execution procedure ask for attachment of the said property.

I hope I have made myself clear regarding the topic, comment below if you have any queries.

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