Title Transfer To Bona Fide Purchaser Devolving From Forged Instrument Held Void; Mortgage Also Voided

In Toronto, Canada, The Toronto Star reports:

• For Paul Reviczky, a 90-year-old victim of mortgage fraud, it's the best possible ending to a two-year nightmare. In a precedent-setting decision, Ontario superior court has taken another step toward protecting victims like Reviczky from being on the hook for hundreds of thousands of dollars. The court ruled this week that the Hungarian immigrant isn't responsible for the $300,000 mortgage taken out on his home, after it was sold in 2005 without his knowledge.

***

• The decision is the first of its kind in the province since a landmark Court of Appeal ruling in February. That decision found that even a bona fide purchaser can't legally buy property from a fraudster.

• This decision expands on the previous one by finding that a $300,000 mortgage, obtained by the people who purchased Reviczky's home, was invalid because the basis for the transaction was a fake power of attorney document forged by the fraudsters who sold the elderly man's home.

***

• Justice John Macdonald's ruling hands the weighty bill back to the mortgage dispenser, which is HSBC and its insurer (presumably the title insurance underwriter).

For more, see Man, 90, off hook for loan: Court (Landmark ruling lifts $300,000 burden).

To view the decision of the Ontario Superior Court, see Reviczky v. Meleknia, et al. (pdf format; go here for html format - contains embedded links to the relevant Canadian statutes; cases available online courtesy of the Canadian Legal Information Institute).

For follow-up stories, see:

• Law Times: Bank didn’t take proper steps (Mortgage fraud decision will impact real estate industry),
• The Toronto Star: House fraud decision rocks industry (Bank `did not take steps to scrutinize the power of attorney,' judge rules).

For those looking to get some idea of what the concept of "bona fide purchaser" is all about, see The Bona Fide Purchaser for Value of a Legal Estate Without Notice, and then check the case law of your home state to see how your state's judiciary has applied the legal principles that underlie "bona fide purchaser" status.