law-bona-fide-purchaser

BONA FIDE PURCHASER

The Texas Supreme Court has stated

Status as a bona fide purchaser is an affirmative defense to a title dispute. A bona fide purchaser is not subject
to certain claims or defenses. To receive this special protection, one must acquire property in good faith, for
value, and without notice of any third-party claim or interest. Notice may be constructive or actual. Actual notice
rests on personal information or knowledge. Constructive notice is notice the law imputes to a person not having
personal information or knowledge.

Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001) (citations omitted); see AMC Mortg. Servs., Inc. v. Watts,
260 S.W.3d 582, 586 (Tex. App.-Dallas 2008, no pet.).[2] "[W]hereas actual notice is usually a question of fact
for the jury, constructive notice is a legal presumption not to be controverted." Univ. State Bank v. Gifford-Hill
Concrete Corp., 431 S.W.2d 561, 571 (Tex. Civ. App.-Fort Worth 1968, writ ref'd n.r.e.).

A party has constructive notice of instruments properly recorded in the proper county. Tex. Prop. Code Ann. §
13.002 (West 2004); AMC Mortg. Servs. Inc., 260 S.W.3d at 586. A party claiming title through principles of
equity has the burden of proving that a subsequent purchaser was not a good faith purchaser. AMC Mortg.
Servs., Inc., 260 S.W.3d at 586.

Bona Fide Purchaser Defense

a "transfer or obligation is not voidable under Section 24.005(a)(1) of this code against a
person who took in good faith and for a reasonably equivalent value or against any
subsequent transferee or obligee." Id. § 24.009(a)
The remedies provided creditors by the Act are, however, subject to the limitation in Section 24.009 of the
Business and Commerce Code, providing for a
bona fide purchaser defense. Specifically, section 24.009(a)
of the Act states that a "transfer or obligation is not voidable under Section 24.005(a)(1) of this code against a
person who took in
good faith and for a reasonably equivalent value or against any subsequent transferee
or obligee." Id. § 24.009(a) (Vernon 2002). Good faith is thus an affirmative defense to a fraudulent transfer
claim. Flores, 161 S.W.3d at 756. A person who invokes that affirmative defense "carries the burden of
establishing good faith and the reasonable equivalence of the consideration obtained." Id. (quoting Uniform
Fraudulent Transfer Act § 8 cmt. 1, 7A II U.L.A. 352 (1999)). Thus, in seeking summary judgment on his bona
fide purchaser affirmative defense, Love had the burden to prove as a matter of law that he took the property in
good faith. See Flores, 161 S.W.3d at 756; Rhone-Poulenc, 997 S.W.2d at 223. (9) To defeat summary judgment
based on such proof, Hahn had to raise a material fact issue on Love's good faith. See Rhone-Poulenc, 997 S.W.
2d at 222-23.
09-0066  BERTRAND R. LOVE v. ALLON R. HAHN, INDIVIDUALLY AND D/B/A HAHN'S GULF SERVICE; from Harris County; 1st district (01-07-00096-
CV, 273 SW3d 712, 11-06-08) (UFTA fraudulent transfer claim, constructive trust bona fide purchaser defense)
A transferee who takes property with knowledge of such facts as would excite the suspicions of a person of
ordinary prudence and put him on inquiry of the fraudulent nature of an alleged transfer does not take the
property in good faith and is not a bona fide purchaser. See Wright v. Lynn, 16 Tex. 34, 1856 WL 4851, at *5
(Tex. 1856) (holding that lack of good faith is proved by any "competent means, which affords any fair
presumption or inferences as to the real object and intention of the parties, tending to show knowledge of "the
fraudulent acts and intentions of the [transferor]"); First S. Props., Inc. v. Gregory, 538 S.W.2d 454, 457-58 (Tex.
Civ. App. 1976) (holding that transferee without actual or constructive notice of circumstances tending to show
fraudulent intent of transferor is bona fide purchaser); see also Flores, 161 S.W.3d at 756 (defining good faith as
lack of awareness of transferor's intent).
Notice of fraudulent intent can be either actual or constructive. See
Madison v. Gordon, 39 S.W.3d 604, 606 (Tex. 2001); First S. Props., 538 S.W.2d at 457-58. Actual notice results
from personal information or knowledge; constructive notice is notice the law imputes to a person not having
personal information or knowledge. Madison, 39 S.W.3d at 606; see Carr v. Hunt, 651 S.W.2d 875, 880 (Tex.
App.--Dallas 1983, writ ref'd n.r.e.) (finding no notice of actual knowledge of fraudulent acts or facts that would
have put purchaser of property on further inquiry as to possible claims of fraud).

The question of whether a party has notice is a "question of fact which is foreclosed by the judgment of the trier
of the facts; it becomes a question of law only when there is no room for ordinary minds to differ as to the proper
conclusion to be drawn from the evidence." O'Ferral v. Coolidge, 228 S.W.2d 146, 148 (Tex. 1950). Thus a
transferor's notice of fraudulent intent is a question of fact that generally goes to the jury. See Wright, 1856 WL
4851, at *5 (because proof positive of actual knowledge of purchaser of property and fraudulent acts of vendor
could seldom be obtained, evidence conducing to prove fraudulent intent should have been permitted to go to
jury to decide whether assignment was fraudulent and whether purchaser "was party to and affected by the
attempted fraud of his vendor"); see also Hardy Road 13.4 Joint Venture v. Med. Ctr. Bank, 867 S.W.2d 889, 893
(Tex. App.--Houston [1st Dist.] 1993, writ denied) (noting that whether or not party had notice of title issues is
generally fact issue and thus is inappropriate for resolution by summary judgment).



08-0641          
URI COHEN v. DELORES HAWKINS; from Harris County; 14th district (14‑07‑00043‑CV, ___ SW3d ___,
04‑15‑08, pet denied Nov. 2008)(real estate transaction, setting aside deed, clean hands, bona fide purchaser)
respondent's motion to compel petitioner to serve petition for review on respondent dismissed as moot