The Real Purchaser


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Over the years, there have been a lot of wild stories that have popped up in real estate investment. Some of them are make believe. However, there are some pretty wild sounding ones that have turned out to be true.

In one such story, a homeowner sold his house to one buyer, and turned around and sold it to a second buyer. The second buyer rushed to the courthouse and registered the deed before the first buyer had a chance. The good news if this actually happens to you there is hope.

Giving notice or recording the deed is not the true transfer of ownership. It is a legal requirement for tax purposes. Recording the deed tells the world and the county clerk’s office who the title of the property transferred to.

In order to buy a property, there must be a signed deed which passes ownership of the property from the seller to the buyer. If by chance a disreputable seller gives two separate deeds, most states already have legislation in place to handle it.

The Real Buyer
In the US, most states use a race-notice rule. The first person to record his document is the rightful owner as long as he is the bona fide purchaser or real buyer. A bona fide purchaser is defined as:

• one who received title and made record of it in good faith

• Paid value for the home, and

• Was not aware or had notice of a prior transfer.

Foreclosure

Foreclosures is one situation where this double buyer scenario happens frequently. In foreclosures, a real estate investor can get a quitclaim deed for free.

If the 2nd buyer or real estate investor receives a deed without any money transfer and records  his first, he does not qualify as a bona fide purchaser  or real buyer.

If the 2nd buyer knew of the existence of a first buyer , even an unrecorded one, the 2nd buyer is not the real buyer or bona fide purchaser.

If the 2nd buyer acts in bad faith, he does not qualify as the bona fide purchaser.

If you are an innocent buyer and you pay for a property and receive a deed, there are laws to protect you. The hard part will be in proving your case.  The professional real estate lawyer on your real estate business team will be your biggest asset in cleaning mess this up.

There is always risk in real estate, but states are trying to protect the honest real estate investor. For more information on real estate investment or real estate franchise opportunities, visit us at, Homevestorsfranchise.com.

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