The Sunday Mail
Legal Matters with Arthur Marara
Part I
Sadly, not all of us are honest when entering into commercial transactions. A number of times, some innocent parties find themselves in the midst of a storm after purchasing properties that are subject to disputes without being exposed to the reality on the ground about existing claims.
This week, we want to look at the concept of a bona fide purchaser with particular focus on transactions involving immovable property.
What is a bona fide purchaser?
A bona fide purchaser is someone who buys a property without any reason to suspect irregularities in the transaction.
A bona fide purchaser cannot have actual or constructive notice as to defects in the seller’s right to transfer title to the property.
A bona fide purchaser honestly intends to purchase the property offered for sale and does not intend to acquire it wrongly.
However, if a buyer is fully aware that the seller is selling stolen property, for example, then that buyer has actual notice and cannot claim to be a bona fide purchaser.
If a third party has a title deed over a property, a buyer has constructive notice of defects in a seller’s title and also cannot claim to be a bona fide purchaser.
The 9th edition of the “Blacks Law Dictionary” defines a bona fide purchaser as “one who buys something for value without notice of another’s claim to the property and without actual or constructive notice of any defects in or infirmities, claims or equities against the seller’s title; One who has in good faith paid valuable consideration for property without notice of prior adverse claims.”
In acquiring real estate, a purchaser must undertake due diligence as a precautionary measure. There is need to establish good root of title. This can involve doing site visits and a search of the title so as to confirm the real owner of the land as well as check encumbrances.
I have written articles in the past on the important safeguards before acquiring a property. You can read them from The Sunday Mail website.
What makes one a bona fide purchaser?
Whether or not a party qualifies as a bona fide purchaser is often the subject of litigation in many of the instances. In CBZ Bank Limited v David Moyo and Another SC17/201, the Supreme Court was called upon to determine whether or not a bona fide purchaser has any protection at law other than having a personal right against the seller of the property.
The facts of the Moyo case were that on November 28, 2011, the Deputy Sheriff attached immovable property known as stand number 1301 Tynwald South Township of Stand 1042 Tynwald South, measuring 383m2, registered under Deed of Transfer No. 9072/2008 (hereinafter referred to as the property).
The attachment was pursuant to a writ of execution issued in favour of the appellant (the judgment creditor a quo).
The appellant had obtained judgment against one Nompiliso Maphosa in case number HC 6553/11.
The first respondent challenged the attachment. He claimed that he purchased the property from Nompiliso Maphosa and Tarisai Matsveru in August 2010, long before the appellant was granted the judgment for which it was attached.
In view of the first respondent’s claim, the Deputy Sheriff filed an inter-pleader application before the court a quo.
The full purchase price was paid to the sellers in August 2010. Machekeche and Partners, the legal firm mandated to transfer the property to the first respondent, had obtained capital gains tax and rates clearance certificates, and subsequently lodged transfer papers with the Registrar of Deeds on December 20, 2010.
Transfer of the property could not be registered, because Lizhibowa Real Estate (Pvt) Ltd had on December 15, 2010 obtained a provisional order from the High Court that enabled it to subsequently register a caveat against the property in dispute.
At the time this matter was heard in the court a quo, that order was still in force. At the time the caveat was registered, Lizhibowa Real Estate (Pvt) Ltd was the only known judgment creditor that had obtained an order against one of the sellers.
This was several months after the first respondent had innocently bought the property from the sellers.
The appellant issued summons against Nompiliso Maphosa on August 17, 2011 under case No. HC 6553/11, a year after the first respondent had purchased the property in question. The summons was served on the first respondent, who was already residing at the property in question.d
The first respondent through his legal practitioners informed the appellant that he had purchased the property from the sellers and had taken possession.
Undeterred by that information, the appellant obtained a default judgment against Nompiliso Maphosa and subsequently sought and obtained a writ of execution against her movable and immovable property, including the immovable property the first respondent had purchased.
On receiving the writ of execution, the first respondent applied to the court a quo for an order staying execution pending the institution and finalisation of interpleader proceedings.
He had previously obtained a provisional order staying execution of the same property by Lizhibowa Real Estate (Pvt) Ltd.
The High Court granted the first respondent’s application. Whilst acknowledging that the property was still registered in the names of Nompiliso Maphosa and Tarisai Matsveru, the court a quo reasoned inter alia that there were special circumstances entitling it to find in favour of the first respondent.
The Appellant was aggrieved by the decision of the High Court and appealed to the Supreme Court. We will look at their grounds for appeal and the reasoning of the Court in the next article.
LEGAL DISCLAIMER: The material contained in this post is set out in good faith for general guidance in the spirit of raising legal awareness on topical interests that affect most people on a daily basis. They are not meant to create an attorney-client relationship or constitute solicitation. No liability can be accepted for loss or expense incurred as a result of relying in particular circumstances on statements made in the article/post. Laws and regulations are complex and liable to change, and readers should check the current position with the relevant authorities before making personal arrangements.
Arthur Marara is a corporate law attorney practicing law in Harare, Zimbabwe. He is also a notary public and conveyancer. He is also passionate about labour law, commercial, and family law and promoting legal awareness and access to justice. He writes in his personal capacity. You can follow him on social media (Facebook Attorney Arthur Marara), or WhatsApp him on +263780055152 or email [email protected].
