On July 25, 2024, Justice Ruchelsman of the Kings County Commercial Division issued a decision in Pfanner v. Anderson, 2024 NY Slip Op. 32576(U), holding that a buyer who had no reason to think a deed was not valid was a good faith purchaser and was entitled to possession of the property, explaining:
Hercules Argyriou, a representative of Wallace submitted an affidavit and asserts that POK 325 Main LLC represented itself as the sole owner of the property and that defendant Anderson, who signed on behalf of the corporate entity had the authority to execute the contract. Thus, Wallace insists they are good faith purchasers and the lawsuit as to them must be dismissed. The plaintiff presents numerous arguments why the sale to Wallace should be voided. First, that Wallace knew Pfanner was an owner of the corporate entity and should have known that Anderson did not have sole authority to enter into the contract. Further, the plaintiff argues Wallace participated in the sale knowing of Pfanner’ s interests and ignoring them to Anderson’s benefit. However, it is well settled that an intended purchaser must be presumed to have investigated the title, and to have examined every deed or instrument properly recorded, and to have known every fact disclosed or to which an inquiry suggested by the record would have led. If the purchaser fails to use due diligence in examining the title, he or she is chargeable, as a matter of law, with notice of the facts which a proper inquiry would have disclosed.
In this case there are no inquiries or investigations which Wallace should have undertaken. Wallace was presented with a contract and all the indicia of ownership on the part of POK 325 Main LLC and Anderson. There was no basis for Wallace to wonder and then inquire whether Anderson, in fact, had the authority to engage in the sale or to engage in further diligence. Thus, the affidavit of Mr, Argyriou unmistakably demonstrate that Wallace had no knowledge of Pfanner, had no reason to have knowledge of Pfanner and did not fail to exercise due diligence by not making any further inquiries. Therefore, Wallace was a bona tide purchaser as a matter of law.
The plaintiff argues that Wallace received the property through Anderson’s fraudulent means. It is true. that one cannot be a bone fide purchaser through a forged deed and that such forged deed does not convey title. In Faison v. Lewis; 25 NY3d 220, 10 NYS3d 185. [2015] the· Court of Appeals explained that a deed that contains a forged signature is a fraudulent deed which conveys no title. However, a deed where the signature and authority for conveyance are acquired by fraudulent means is voidable and does convey good title. The court stated that a deed containing the title holder’s actual signature reflects the assent of the will to the use of the paper or the transfer, although it is assent induced by fraud mistake or misplaced confidence. Consequently, such a deed is clothed with all the evidences of good title, may encumber the property to a party who becomes a purchaser in good faith. Therefore, in Shau Chung Hu v. Lowbet Realty Corp., 161 AD3d 986, 78 NYS3d 150 [2d Dept., 2018] the court held an individual who executed a deed obtained by fraudulent means could convey the deed to the bona fide purchasers since there was no allegation the individual’s signature was forged.
Likewise, in this case, there is no allegation Anderson’s signature was forged, rather that he lacked authority to transfer the property to Wallace. Even if true; and Pfanner can pursue such claims against Anderson, that does not render the deed. void, making possession: by Wallace unlawful. Rather, Wallace maintains valid title since such title was obtained by them from Anderson who, it is alleged, only utilized fraudulent means to obtain any authority himself. In these circumstances, if true, Anderson maintained voidable title and thus Wallace obtained good title.
(Internal quotations and citations omitted).