bona fide purchaser vs reversal of trustee sale

I purchased the proeprty and recorded deed. One month later, trustee contacted me and threatened to reversed the deed. However, after some research, I noted that there was a bona finde purchas be protected by erroneous sale.
Does anybody know about this?


A “bona fide purchaser for value” is simply describing in legalese the fact that you are a “steps” buyer who purchased a foreclosure property as a third party investor. As a “bona fide purchaser for value” you gain a certain level of protection from litigation that sometimes occurs in a foreclosure sale. Although, has many have pointed out, anyone can sue anybody for seemingly any reason.

I know that Sean and others have addressed the “trustee attempt to rescind sale” topic in other posts on this forum … Based on what I’ve seen, once you’ve purchased the property at the steps and have recorded the deed, you are in a strong bargaining position with the trustee (and more importantly, the courts). One key is whether there was any notice made to you before you recorded deed. if, as you say, the notice came one month after the sale (and you had already recored the deed), then you can threaten counter legal action against the trustee if they are pursuing a rescinded sale. The trustee may be attempting to intimidate you into accepting a sale nullification as they may well be facing legal action from the previous owner who is making a case that the foreclosure sale did not follow proper protocol (could be for many different reasons). If the previous owner is lawyered up, then you may be the easier (less expensive) target for the trustee. If they realize that it’s going to cost them more not to settle with you, then they may have to pay you a generous premium for your time/effort as a bona fide purchaser for value of the property. Negotiate knowing they’ll have to play ball with you, not visa versa.

Thanks for your comment. However, if I do not money but the property, do I have an option of holding to the property, not accpeting compensation?

What if the purchaser was a person who regularly purchased foreclosure properties? Wouldn’t he have to prove he was a bona fide purchaser? What are some cases that address that issue.

Hi Bill,

No. It does not matter if you are a newbie (1st time trustee sale buyer) or veteran buyer at the “steps.” I heard that some lawyers were attempting to brand experienced steps buyers as non-BFPs. Ha! What a non-sensical notion! So if you’re savvy and experienced, that means you can’t be a bonafide purchaser (BFP) and buy at trustee sales?! Total Bunk! (< I’m tempted to use a stronger phrase).

From my review of case law, a “bona fide purchaser for value” BFP status is based on two factors:

  1. if the bidder paid consideration (i.e. money) and
  2. “without notice of any adverse interest or of any irregularity in the sale proceedings” (thereby affirming the holding in Calhoun v. Nguyen (2003).

My *interpretation* of point #2 is that you are participating (bidding as an investor) in a free/fair, open public auction, and have no insider relationship with a party to the sale (e.g. lender or trustee) that would grant you opportunities not available to the public. You may find other interpretations and my opinion is an uneducated one (I have no legal background). More discussion on this topic here >

Hi Idannyb:

You missed my argument, hence yours was basically irrelevant because it was not even close to point.

My argument was based on your number (2)2) “without notice of any adverse interest or of any irregularity in the sale proceedings” (thereby affirming the holding in Calhoun v. Nguyen (2003). - which you cited but ignored in your summation.

Again my contention is if the buyer new of or should have known of the Lis Pendens on the property he could not be a BFP. I added that the fact that he was a veteran buyer he could be accused of being negligent for not checking and therefore could not be able to legally avail himself of the excuse of not knowing.

Again I am not a lawyer so I hope someone out there has a case or some law that I can refer to that is on point.


In rereading my reply, I want to apologize if I was impolite in my response. It is just that most of the arguments concerning whether a buyer can be a BFP are based on the purchaser’s knowledge of a miss action by the Trustee.

I could care less about that argument. My argument is if the buy knew or had reason to know that there was a Lis Pendens or other reason that the sale was being legally contested, then he couldn’t be a bonafide purchaser when he purchased a trustee’s sale.

And you contention that it would matter if he was “savvy and experienced,” would not be, “! Total Bunk!” if one cited his negligence in not checking because one with those credentials should check the records of the property he is attempting to purchase.

I think a court could be convinced that he couldn’t fall back on that claim of not knowing about the Lis Pendens as a “newbie” buyer to a trustee sale would.

Again I’m not a lawyer but that is my guess.

Hi Bill,
Just curious … are you looking to add a trustee sale buyer as co-defendant to a (your) lawsuit versus the foreclosing lender? Your questions seem to lead in that direction. If so (yes), has the trustee?s deed upon sale (TDUS) already been recorded? Lenders are less likely (and less able) to rescind the sale after the buyer?s recordation of the TDUS. Hence, if the objective is to keep the property, the ex-owner?s lawyers, may advise their client to sue (or add into suit v lender) the trustee sale buyer. But that BFP status/shield makes it more of a challenge to successfully sue the buyer ? Hence, some lawyers are hoping to find ways/means to convince a judge/jury that the trustee sale buyer was somehow NOT a BFP.
My bias is for the trustee sale buyer. Having been tossed in to such a suit, I can identify with the royal pain of being sued for no good/valid/concrete (< pick your adjective) reason. In my case the lis pendens and suit vs the lender were initiated AFTER the TDUS was perfected (as date of sale). Consequently, I was not vulnerable to the ?you were on notice? argument.
Just to clarify, a lis pendens is simply a notice of an action (a law suit has been filed). And as long as it was properly recorded *before* the trustee sale date, it puts *everyone* on notice ? newbies and veteran investors alike.
As to whether a lis pendens could potentially strip away an investor?s BFP status??? Better that an attorney, who has been down this path, weigh in with an opinion or case example. I suspect you could get good arguments on either side with many “it depends” scenarios.
While a lis pendens may give “notice” to all who care to (or need to) be aware, a lis pendens may not provide sufficient data for any party determine “adverse interest” nor lead to any “irregularity in the sale (trustee sale) proceedings.” Hopefully a more learned legal mind can share their perspective. Specifically – whether a lis pendens recorded BEFORE a trustee sale *might* strip away BFP status for a 3rd party trustee sale buyer? My guess is ?it depends??