Bona Fide Purchaser

What exactly makes a Bona Fide Purchaser? It ain’t what you think anymore…

• The following is an excerpt chapter from my critically acclaimed book “Quantum of Justice - The Fraud of Foreclosure and the Illegal Securitization of Notes by Wall Street.” This is part one of what is a two part post, as it says above…”It ain’t what you think anymore…”

The main reason it behooves someone to file a lis pendens is to make sure that the active court case pertaining to a real estate property becomes public knowledge. It legally becomes public knowledge when it is filed with the county recorder. This way, people can research property online, or at the County Recorder’s Office computers and find out what liens or encumbrances are filed against the property. The process of a lis pendens is to file it with the court and then take the court-stamped copy to the County Recorder’s Office and file it there. It becomes part of the paperwork, so that any party interested in the chain of title history on that property can find out about any encumbrances that are filed on the property and thoroughly research it. Professional real estate investors, banks, realtors, brokers, city inspectors, general contractors or appraisers frequently use the county records. It is part of their business practice as a professional in their field. This is where they find the crucial and up-to-date information prior to either submitting a bid to a realtor to purchase a property that is for sale or doing the necessary research before submitting a bid to an auctioneer during a trustee foreclosure sale.

I filed the lawsuit against Wells Fargo, and NDEx West, the acting substituted trustee, in April of 2011. Wells Fargo and NDEx immediately filed to have the case remanded to federal court. We had filed moving papers numerous times during the months that followed.

What this means is that both Wells Fargo and NDEx knew of the lawsuit pending against the property. The open case meant that there were unlitigated questions pertaining to the property and being actively pursued in court. Since I immediately filed the lis pendens the same day as the lawsuit, it meant that the defendants had known for nearly a year that the case was opened against the property. During the case, I also filed the lis pendens with the court to become part and parcel of the case, just as an added measure to make sure everyone involved knew there was a lis pendens filed. I believe this one act helped stop Wells Fargo from moving forward with the foreclosure process for well over a year. Although, every month, and twice in December of 2011, I had to go down to the courthouse because the foreclosing trustee had the property scheduled for sale. Every month, on the day that the foreclosure was scheduled, I went down to the courthouse steps and announced to all prospective purchasers of the property, if it were to go on sale, it would become part of a current and ongoing court case against“the property for fraud.

Black’s Law Dictionary defines bona fide as: "In or with good faith; honestly, openly, and sincerely; without deceit or fraud. Merrill v Dept. of Motor Vehicles, 71 Cal.2d 907, 80 Cal.Rptr. 89, 458 P.2d 33. Truly; Actually; without simulation or pretense. Innocently; in the attitude of trust and confidence; without notice of fraud, etc. Real, Actual, genuine, and not feigned. Bridgeport Mortgage & Realty Corporation v. Whitlock, 128 Conn. 57, 20 A.2d 414, 416."

For me, the part that stands out in this definition is where it states, “without deceit or fraud”, and further on with, “without “notice of fraud, etc.” You see, in order to make a true sale in a foreclosure sale, according to CA Civ Code Section 2924, it states that the sale is “true and correct” and that the buyer of the property sold at the foreclosure is a bona fide purchaser.

Let’s go a little deeper then and find out what a bona fide purchaser is according to the law. Black’s Law Dictionary states a bona fide purchaser to be: "One who purchased property for value without any notice of any defects in the title of the seller. Walter v Calderon, 25 Cal.App.3d 863, 102 Cal. Rptr. 89, 97. One who pays valuable consideration, has no notice of outstanding rights of others, and acts in good faith. J.C. Equipment, Inc. v. Sky Aviation, Inc., Mo. App., 498 S.W.2d 73, 75.”

“Now, when I read this, it seemed clear to me that if a legal case is opened against a property, and a lis pendens is filed pertaining to that legal action against the property, then this would mean that the public has been properly informed regarding the legal action, the encumbrance, and the defect in the title. It would mean that there had been proper notice of outstanding rights of others, which in my case, were under consideration because of the legal action pending.

Black’s goes on to state that a bona fide purchaser for value: "is one who, without notice of another’s claim of right to, or equity in, property prior to his acquisition of title, has paid vendor a valuable consideration. Snuffin v. Mayo, 6 Wash. App. 525, 494 P.2d 497." So, clearly this would mean that to be a bona fide purchaser in a foreclosure sale you would need to have not been notified of or have any knowledge of a lis pendens filed against the property. The lis pendens is filed because there is a claim of right to equity in the property prior to the sale. The fact that it is filed with the county recorder means it is public knowledge. Any professional purchaser who regularly buys properties at foreclosure sales would check with the county recorder prior to a sale.

Now, let us take this a little further still. It clearly states in the Universal Commercial Code or U.C.C. § 7-501 - Form of Negotiation and Requirements of Due Negotiation: “One who buys property or to whom a negotiable document of title is transferred in good faith and without notice of any defense or claim to the property or document. One who takes trust property for value and without notice of breach of trust and who is not knowingly part of an illegal transaction.”

So, the requirements of due negotiation are defined in U.S. Legal online legal definitions as: "Due negotiation refers to a negotiation made after careful thought and deliberative consideration given to the matter at hand. A negotiable document of title is duly negotiated when it is negotiated to a holder who purchases it in good faith without notice of any defense against or claim to it on the part of any person and for value, unless it is established that the negotiation is not in the regular course of business or financing or involves receiving the document in settlement or payment of a money obligation. A holder of a duly negotiated document acquires title to the document, title to the goods, all rights accruing under the law of agency or estoppel, and direct obligation of the issuer to hold or deliver the goods according to the terms of the document.”

Now, perhaps you might help me out here because I’m a bit confused.

I filed my lawsuit in April 2011. I filed a lis pendens pertaining to that lawsuit regarding my property in foreclosure in April 2011. I filed the lis pendens to make it public knowledge so that anyone who was looking to purchase my property at a foreclosure auction knew there was a lawsuit pending on my property. That way, if anyone were to look into the parcel number at the County Recorder’s Office, they would find a claim of right being contested, they would find that there was in fact a defect in the title and there was an encumbrance on the property in the form of a lawsuit. They could look further and find that the lawsuit dealt with fraud. So, tell me how could the court find that the buyer was a bona fide purchaser in accordance with the rule of law? Based on what I had done to inform the public regarding the lawsuit pending on the property, there was no way that one could find the purchaser of the property to be a bona fide purchaser.

However, if the buyer isn’t a professional buyer, then this specific rule has a bit more leniency to it. The reason for this is that a professional buyer would know the professional steps to take in order to properly research a property to purchase. It is what they do for a living, so they know to do the appropriate research on a parcel they are thinking of buying. But if it were simply a common person who has never purchased a home, or purchases less than one property every two years, they are considered a non-professional buyer, and this rule does not apply to them. They are considered to be less cognizant of the procedures for real estate.

Let us revisit the day my home was illegally sold in front of my eyes. It began with four bidders. I quickly extinguished two after they bid. I thrust my sign in front of them and told them they would be sued if they won this bid. They quickly decided to stop bidding for some reason. The other two bidders I had seen at the courthouse steps every time I had been there over the past year. I knew they were professionals. They ignored my sign and threat of inclusion in my lawsuit. They continued to bid. I listened to the price of the home rise by the thousands. They continued to bid. I soon watched my home being illegally sold in front of my eyes. I knew the banks were fraudulent, I knew the trustee was fraudulent and complicit, I knew the buyers were what I call institutional and professional in nature.

It made no sense.

I left the steps in shock, feeling as if I couldn’t breathe. I immediately marched down the steps and around the corner so that I was away from the energy of my home being stolen from me. I sat down at a bus stop to regroup, not knowing what to do. So, I sat for a while waving a few buses on as they slowed thinking I was indeed waiting to board a bus. After about ten minutes, I hustled back to my car to go home.

I hadn’t been home for much more than an hour when there was a knock on the door. I peeked out to see who it was knocking, only to find a stranger standing and waiting. I opened the door and stepped out onto the front porch, closing the front door behind me. The man smiled while trying to act as if he were my friend. He knew he was treading on dangerous territory. He was someone who I had never seen before and introduced himself by saying that he had just purchased my home at the foreclosure auction and wondered if anyone was living in the house. When he asked if he could come in and see the premises, I winced at hearing that. He seemed proud. I told him that I was aware that the house had just been sold, and that he wasn’t the person who was bidding on it. I watched the auction take place and he wasn’t part of the scenery.

Taking out his card, he slowly extended it to me. I took it and told him that it was best that he leave my porch immediately. He knew then that he wasn’t welcome under any circumstance. As he began to slither down the front steps, he turned and stated that we had three days to leave the property. I moved toward him and descended a few steps. As I stood on the step above him, looking down at him, I told him that wouldn’t be happening, and I would be seeing him in court for fraudulently stealing my home. I added, “Now, get off my property!”

I spent the rest of the day on the couch without saying a word.