Legal Definitions - purchaser

Purchaser

A purchaser is an individual or entity who acquires property, goods, or services by providing something of value in return, most commonly money. This act of exchanging value, known legally as "consideration," is what distinguishes a purchaser from someone who receives something as a gift or through inheritance.

The term can also refer to specific types of buyers depending on the legal context:

• Bona Fide Purchaser (BFP): This refers to someone who buys property for a fair price, genuinely believing the seller has the legal right to sell it, and without any knowledge of hidden problems with the title or other people's claims to the property. The law often provides special protections to bona fide purchasers to ensure stability and fairness in transactions.

  • Example 1 (Real Estate): Sarah buys a plot of land from Mark, who presented a clear deed. Unbeknownst to Sarah, Mark had previously promised a right-of-way across the land to his neighbor, but this agreement was never formally recorded. Because Sarah paid a fair market price and had no way of knowing about this unrecorded agreement, she would likely be considered a bona fide purchaser, and her ownership might not be affected by the neighbor's prior claim.

    Explanation: Sarah acted in good faith, paid value, and had no notice of the neighbor's claim, fulfilling the criteria for a bona fide purchaser.

• Affiliated Purchaser: In certain regulated markets, particularly in finance, an affiliated purchaser is a buyer who has a close relationship with the seller or with the process of distributing the securities being sold. These relationships might involve shared control, common management, or acting in concert with the seller. Such purchases are often subject to specific rules designed to prevent market manipulation or ensure fair trading practices.

  • Example 2 (Securities): A large investment fund, whose parent company also owns a significant stake in a corporation issuing new shares, decides to buy a substantial block of those newly issued shares. This investment fund would be considered an affiliated purchaser because of its close connection to the issuing corporation through the parent company.

    Explanation: The investment fund's purchase is "affiliated" due to the shared ownership structure with the company issuing the shares, which could potentially influence the market for those shares.

• Purchaser Pendente Lite: This term describes someone who buys property or an interest in property while that specific property is the subject of an ongoing lawsuit. Such a purchaser typically acquires the property subject to the outcome of the litigation, meaning their ownership or rights could be affected by the court's final decision.

  • Example 3 (Disputed Asset): During a contentious divorce proceeding, a couple's jointly owned vacation home becomes the subject of a dispute over its division. While the lawsuit is still active, one spouse attempts to sell their half-interest in the home to a third party, David. David would be a purchaser pendente lite because he is buying an interest in property currently under legal dispute.

    Explanation: David's purchase occurs "pending litigation" (pendente lite) concerning the property, meaning his acquired interest could be altered or invalidated by the divorce court's final ruling on the home's division.