Opinion ID: 867575
Heading Depth: 3
Heading Rank: 2

Heading: Bone fide purchaser

Text: ¶ 24 The bankruptcy judge found that Sweetheart was a bona fide purchaser. Absent special circumstances, sales to bona fide purchasers are not upset by the courts. But the status of bona fide purchaser by itself cannot insulate even a well meaning purchaser innocent of wrongdoing when other circumstances are present. Also to be noted is that the rule of `caveat emptor' applies to purchasers at execution sales. Nussbaumer, 107 Ariz. at 508, 489 P.2d at 847 (citing Lebrecht v. Beckett, 96 Ariz. 389, 396 P.2d 13 (1964)). We see no reason why the same rule should not apply in non-judicial sales. ¶ 25 Judge Baum found that Sweetheart had no knowledge of the dealings between Krohn and her lender. One easily imagines, however, that although any potential purchaser at a trustee's sale or a judicial foreclosure may be unaware of the details of the relationship between a particular lender and debtor, every potential purchaser is certainly aware that there were dealings between a lender and a debtor, for how else would the property be set for execution sale? Purchasers at such sales already take the risk of unknown procedural errors. Schaeffer, 176 Ariz. at 328, 861 P.2d at 613. Such bidders can reasonably expect to get bargains because of the nature of foreclosure sales, but public policy and the courts should not endorse extraordinary bargains at the expense of already troubled debtors. ¶ 26 Finally, while bona fide purchasers have not been deterred by the possibility of a vacated sale caused by circumstances out of their knowledge and control before the sale, the price paid is completely within the purchaser's control. Knowledgeable purchasers can reasonably evaluate the fair market value of a property to make an appropriate bid that is not grossly inadequate. Thus, while Sweetheart was a bona fide purchaser with respect to the dealings between Krohn and her lender, it is chargeable with knowledge as to the sale price.