Court practice shows that in some cases real estate is registered in the name of other persons using forged documents without the knowledge of the true owner. Then the property is sold to third parties based on the unjustified registration.
The Supreme Court stated that when the true owner goes to court, he must first prove that the property was taken from him illegally without his will. For example, if a forged power of attorney was used, this fact must be confirmed in court.
If the forgery is proven, the sale and the initial registration are deemed invalid. However, the property may have been sold to others later.
The true owner can reclaim the property in two cases: 1) when the contracts are sham, i.e., intended to create the appearance of a bona fide purchaser; 2) when subsequent buyers are not bona fide or their good faith is not protected by law.
According to the Supreme Court, in some cases the contract between buyer and seller is only formal. The main goal is to create the appearance of a bona fide purchaser.
Factors indicating this intent: family or close relations, price significantly below market value, lack of inspection of the property, buyer's financial inability, deposit returned to buyer, other circumstances.
A single factor is usually not enough. The evidence together must lead to only one conclusion that the transaction is sham.
In exceptional cases, a single factor can be decisive, e.g., a person in dire financial straits acquiring expensive property.
If the contracts are not sham, the buyer's good faith must be assessed separately.
A bona fide purchaser who relied on the state register is protected by law. The true owner can only claim damages.
The buyer is not considered bona fide in two cases: 1) if an objection was entered in the register; 2) if the buyer knew the registration was inaccurate.
If no objection was made, the true owner must prove the buyer's bad faith. This is difficult because evidence is often indirect.
The Supreme Court states that indirect evidence must form a coherent system, reliable and mutually supportive.
The purpose of the law is to protect genuinely bona fide persons. Formal criteria alone are unacceptable.
If the buyer is not proven bona fide, his rights are protected.
In some cases, even a bona fide buyer is not protected: 1) marital joint property; 2) double registration; 3) property not subject to private ownership; 4) property acquired gratuitously.
