Definition and Legal Classification of the Subsequent Purchaser
The Term Subsequent Purchaser refers in a legal context to a person or company that acquires an object or right not directly from the original owner or seller, but from an intermediary – usually a prior owner or a secondary purchaser. The subsequent purchaser is therefore typically the buyer within a so-called multi-tiered chain of title. The term often arises in connection with bona fide acquisition, assignment of claims (cession), and the protection of good-faith acquirers.
Fundamentals and Delimitation of the Subsequent Purchaser
The Subsequent Purchaser in the Sale of Goods
In classical sales law, the subsequent purchaser assumes a special role when acquiring a movable item or real estate not directly from the original entitled party, but from another intermediate seller. This gives rise to complex legal issues, particularly in the area of bona fide acquisition (§§ 932 et seq. BGB) or the distinction between original and derivative acquisition of ownership.
Subsequent Purchaser in the Law of Claims
The subsequent purchaser is also significant for claims whenever a claim is assigned multiple times (so-called chain assignment). The subsequent purchaser is then the last or a later acquirer of the claim, whose legal position crucially depends on whether prior assignments were valid and whether he acquired in good faith.
Legal Aspects and Safeguards
Bona Fide Acquisition of Goods
Under certain conditions, the subsequent purchaser may acquire ownership of an item even if the seller is not entitled to transfer it. What matters here is bona fide acquisition (§§ 932 et seq. BGB). It is crucial that the subsequent purchaser is in good faith when acquiring the item, meaning he has no knowledge or grossly negligent ignorance of the seller’s lack of authority.
Requirements for Bona Fide Acquisition
- Legal Acquisition: Acquisition of ownership must be based on a legal transaction (such as a purchase contract).
- Uninterrupted Possession: The transfer of possession must occur via an unbroken chain of possession.
- Good Faith: The subsequent purchaser must not know at the time of acquisition that the seller is not the owner.
- No Loss of Possession: The item must not have been lost by the owner, § 935 para. 1 BGB.
Legal Consequences and Risks
If a subsequent purchaser acquires ownership in good faith, he acquires original ownership. If this is not the case, the original owner remains entitled to assert claims for return under § 985 BGB. In the event of a dispute, the subsequent purchaser bears the risk of loss of rights if good faith was absent.
Subsequent Purchaser in Real Estate Law
In the case of bona fide acquisition of real estate, land register law provides special treatment for the subsequent purchaser: the protection of good faith applies to the correctness of the land register (§ 892 BGB). With multiple transfers and entries, the order of entries and verification of the actual legal situation play a central role.
Subsequent Purchaser and Claims Rights
Chain Assignment and Multiple Assignment
In assignment law, a claim may be assigned multiple times. The subsequent purchaser is a later assignee whose legal position is influenced by the validity and priority of the assignments.
Priority Rule (§ 398 BGB)
In the case of multiple assignments of a claim, the legal position of the subsequent purchaser is determined by the chronological order of valid assignments. A later assignment is generally invalid in relation to an earlier one, unless statutory rules of protection intervene.
Bona Fide Acquisition of Claims (§ 405 BGB)
In the assignment of bearer instruments or with appropriate legitimation, § 405 BGB protects the bona fide acquirer. The subsequent purchaser can under certain conditions become the holder of the claim even if the assignor was not authorized to dispose of it.
Subsequent Purchaser in Insolvency Law
Segregation and Contestation
If a seller becomes insolvent within the chain, this can also have consequences for the subsequent purchaser. For example, if insolvency proceedings are opened against the first acquirer, the subsequent purchaser may, in certain cases, assert rights of segregation in accordance with § 47 InsO. Furthermore, acts within the chain may be contestable (§§ 129 et seq. InsO), which can especially endanger the acquisition by the subsequent purchaser.
Protection of the Subsequent Purchaser in Private International Law
In international trade and claim transactions, conflict-of-law provisions play a role in determining which law governs the acquisition of ownership by a subsequent purchaser. Of particular importance are, among others, the property law of the location of the property or the Convention on the Assignment of International Receivables.
Practical Relevance and Examples of Application
Subsequent purchasers are present in numerous legal transactions, for example:
- Used car trade: Acquisition of a vehicle from an intermediary who was not himself the initial acquirer.
- Trade with company shares: Sale of shares or company stakes via several intermediaries.
- Claim trading: Acquisition of claims in the context of factoring or securitization.
The status of the subsequent purchaser has a significant influence on the protection of legal transactions and the marketability of items and rights. Particular importance is attached to the question of whether the subsequent purchaser can acquire in good faith and to what extent he is protected by applicable law.
Summary
The subsequent purchaser is a central figure in a variety of legal constellations, especially in property, claims, and insolvency law. His legal position depends on the nature of the subject-matter, the respective chain of acquisition, the presence of good faith, and further legal requirements. Safeguards such as bona fide acquisition or special rules in claims law help to secure and stabilize legal transactions even in multi-tiered acquisition chains. Differentiated treatment of the subsequent purchaser ensures that both contractual acquisition and the interests of the original entitled party are appropriately considered.
Frequently Asked Questions
What rights and obligations does a subsequent purchaser have when acquiring ownership of movable property?
In a legal context, the term ‘subsequent purchaser’ refers to a person who acquires a movable item from someone who is not the original owner. The rights of the subsequent purchaser regarding acquisition of ownership are governed in particular by §§ 932 et seq. BGB (bona fide acquisition from a non-entitled party). A bona fide subsequent purchaser can acquire ownership of a movable item if he is given possession by the seller and, at the time of acquisition, is in good faith that the seller is the owner. Exceptions exist for lost items, anonymous money, and in cases of intent or gross negligence. When purchasing, the subsequent purchaser must exercise the necessary diligence required by law (duty of inquiry), yet may still become owner for the sake of legal certainty. The obligations include, among others, payment of the purchase price and compliance with any statutory duties of care upon acquisition.
What happens if the subsequent purchaser deals with a stolen item under the purchase contract?
If the subsequent purchaser is sold a stolen, lost, or otherwise lost item, a special rule under § 935 BGB applies: bona fide acquisition from a non-entitled party is excluded in these cases. Ownership of the stolen object remains with the original owner, regardless of whether the subsequent purchaser was in good faith. However, the subsequent purchaser may bring claims against the seller (the non-entitled party), such as for rescission of the purchase contract or for damages. Exceptions apply only in the case of money, bearer instruments, and items acquired at public auctions—in these cases, ownership of lost items can be acquired.
What claims can the original owner assert against the subsequent purchaser?
If the subsequent purchaser has acquired an item from a non-entitled party without the possibility of bona fide acquisition under § 932 BGB (in particular in cases of lost items), the original owner is entitled to a claim for return according to § 985 BGB. This so-called ‘claim for restitution of ownership’ gives the original owner the right to demand the return of the item from the subsequent purchaser. Under certain circumstances, he may also assert claims for damages, for instance if the subsequent purchaser has culpably damaged or resold the item. In cases of loss of possession, a claim under § 861 BGB (protection of possession) may also apply.
What is the significance of the subsequent purchaser’s good faith when acquiring real estate?
In contrast to movable property, the acquisition of real estate under German law according to §§ 892, 893 BGB is tied to entry in the land register and good faith in the correctness of the land register. A subsequent purchaser can be entered in the land register as owner in good faith, provided there is no positive knowledge of lack of authority and no gross negligence. However, protection of the subsequent purchaser when acquiring real estate is highly relevant in practice, as reliance on the land register is protected. There are restrictions in cases where entries are manifestly incorrect or when a caveat is entered in the land register.
To what extent is a subsequent purchaser protected against restitution claims by the original owner?
The protection of the subsequent purchaser against restitution claims crucially depends on whether the requirements for bona fide acquisition are fulfilled. If the subsequent purchaser is in good faith and acquires a movable item under the rules of §§ 932 et seq. BGB or real estate under §§ 892, 893 BGB, his legal position is generally strongly protected: the original owner cannot reclaim the item or property. This does not apply if the subsequent purchaser is guilty of gross negligence, intent, or had positive knowledge, or if the acquisition involved lost movable property.
What obligations does the subsequent purchaser have if there is suspicion that the seller is not entitled to dispose?
If there is suspicion regarding the seller’s entitlement—particularly in the case of unusual sale circumstances or significantly reduced purchase prices—the subsequent purchaser is subject to heightened duty of inquiry. Failure to fulfill these due diligence obligations can lead to a finding of gross negligence, which precludes bona fide acquisition under § 932 II BGB. The subsequent purchaser must, for his own protection, verify, for example, purchase receipts, title documents, or the seller’s identity. If the subsequent purchaser fails to meet these obligations, he loses his legal protection and may be subject to claims for restitution or damages by the original owner.
What role do public auctions play in the acquisition of ownership by a subsequent purchaser?
In public auctions, under § 935 II BGB, bona fide acquisition of lost property is possible; this is an exception to the general rule. Thus, a subsequent purchaser who acquires a movable item at a public auction can acquire ownership of stolen or otherwise lost items as long as there is no gross negligence or intent. The acquisition process at public auctions therefore receives special protection in German law in favor of the subsequent purchaser.
