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Ukrainian Supreme Court: Responsibility of a bona fide purchaser

Due to the “carelessness” of the notary, the person almost lost the housing they bought for their own money! The APU “saved” him.

Case No. 645/4220/16-ts of 13.11.2019

The citizen applied to the court with a claim against two persons and a third party – a notary, demanding the invalidation of the sale and purchase agreement and the reclamation of property from illegal possession.

In support of the claim, the plaintiff indicated the following:

  1. There is an established fact of kinship between him and his deceased relative, from whom he inherited by law an apartment, the ownership of which is disputed.
  2. In the Register of Rights to Immovable Property, this right is assigned to the defendant, who bought it, according to available information, from a deceased relative of the plaintiff.
  3. According to information from the Register, the contract was concluded a year after the death of the primary owner of the apartment, which raises a natural question about the honesty of the notary who certified the transaction, about its legality and validity.

The actual owner of the apartment has filed a counterclaim, demanding that he be recognized as a bona fide purchaser and that the fact of recognition of the ownership right for him be established!

He argued that when he bought the apartment, he had no doubts that the transaction was illegal.

The first instance and the appellate instance satisfied claim:

  • the purchase and sale was declared invalid and the apartment was decided to be reclaimed and returned to the plaintiff;
  • The “bona fide purchaser” status was confirmed to the defrauded buyer, but compensation for the apartment was not awarded.

“The Supreme Court of Ukraine, having studied the arguments of the cassation appeal and the case materials, formed a legal opinion, according to which a bona fide acquirer should not be held liable for the authorities’ inaction within the framework of procedures specially created to prevent fraud.”

He concluded that there were grounds for partial satisfaction of the complaint, since:

  •  It was established that the notary has certified the contract concluded by another person on behalf of the deceased person.
  •  The buyer’s “good faith” was confirmed in a transaction that is, in fact, illegal.
  •  The legality of the invalidation of the completed purchase and sale transaction was confirmed.

The Supreme Court of Ukraine canceled the decision of the courts of the previous instances regarding the reclamation of the disputed apartment. He pointed out that a scheme in which a bona fide acquirer loses property and must independently find a way to compensate for his investment is unacceptable and imposes an excessive individual burden on him.

P.S. Obviously, a conscientious acquirer in such a situation needs the help of a lawyer who can minimize the consequences of fraud in real estate transactions.

23.02.2020

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