A purchaser acquires Alberta property from a seller who obtained title through fraud. The purchaser had no knowledge of the fraud and paid fair market value. Under the Land Titles Act, what is the purchaser's legal position?

Q: What is the correct answer to: A purchaser acquires Alberta property from a seller who obtained title through fraud. The purchaser had no knowledge of the fraud and paid fair market value. Under the Land Titles Act, what is the purchaser's legal position?

The correct answer is The purchaser holds an indefeasible title as a bona fide purchaser for value without notice, and the defrauded party's remedy is against the assurance fund. Under the Land Titles Act, Alberta follows deferred indefeasibility. The fraudulent party's title is defeasible, but a subsequent bona fide purchaser for value without notice receives an indefeasible title. The defrauded original owner cannot recover the land from the innocent purchaser but may claim compensation from the assurance fund.

Q: What background knowledge is needed for this Real Property Law question?

Alberta's assurance fund exists under the Land Titles Act to compensate parties who lose interests due to the operation of the Torrens system. It acts as an insurance mechanism, ensuring that the guarantee of title does not leave defrauded parties without remedy while still protecting innocent purchasers.

Q: What is a good way to remember the answer to this Real Property Law question?

Bona Fide Purchaser (BFP) = Bulletproof Title. The defrauded party cannot take back the house — instead, the Assurance FUND pays compensation. Money replaces the land. On the exam, if an innocent buyer purchased from a fraudster, immediately think 'BFP keeps the house, assurance fund compensates the victim.'

Q: What exam tip applies to this Real Property Law question?

Remember the chain: fraudster's title is defeasible, but the next innocent purchaser for value gets indefeasible title. The assurance fund is the safety net for the original victim.

Q: How does this Real Property Law concept apply in real world practice?

A fraudster forges documents to transfer a Red Deer property into their name, then sells it to an innocent buyer at market value. The true owner discovers the fraud but cannot recover the property from the innocent buyer. Instead, the true owner applies to the assurance fund for compensation.

Question

Real Property LawABHARD

A purchaser acquires Alberta property from a seller who obtained title through fraud. The purchaser had no knowledge of the fraud and paid fair market value. Under the Land Titles Act, what is the purchaser's legal position?

Answer Options

A

The purchaser loses the property because fraud voids all subsequent titles

B

The purchaser holds an indefeasible title as a bona fide purchaser for value without notice, and the defrauded party's remedy is against the assurance fund

C

The purchaser must share the property with the defrauded original owner

D

The purchaser's title is void until confirmed by a court order