FORMER PRESIDENT OF THE CORPORATION WHICH OWNED AN APARTMENT BUILDING HAD THE APPARENT AUTHORITY TO SELL THE BUILDING, BUYER WAS A BONA FIDE PURCHASER (SECOND DEPT).

The Second Department determined that the ostensible president the corporation (Lowbet) which owned an apartment building, Liu, had the apparent authority to sell the building, and the buyer, 44th Street Realty, was a bona fide purchaser. Although Liu had been removed as president and replaced by petitioner, that information was not provided to the Department of State Division of Corporations:

The petitioner and Liu married in 1985 and then separated in 1995, after which the petitioner moved to China. Since 1995, Liu has run the day-to-day business of Lowbet, with the petitioner’s knowledge and consent. In August 2006, Liu was removed as president of Lowbet and the petitioner and his son were named president and vice president, respectively. However, the petitioner did not update this information with the Department of State Division of Corporations.

44th Street Realty established, prima facie, that the subject deed was only voidable, not void ab initio, since the petitioner alleged that Liu’s signature and authority to convey were acquired by fraudulent means, but did not allege that Liu’s signature was forged … .

44th Street Realty also established, prima facie, that Liu was cloaked with apparent authority to sign the deed on behalf of Lowbet. The petitioner had condoned Liu’s unfettered control and operation of the day-to-day business of Lowbet, which gave rise to the appearance that Liu possessed authority to enter into a real estate transaction on behalf of Lowbet … . Under the circumstances, 44th Street Realty’s reliance upon the appearance of Liu’s authority was reasonable … .

Further, 44th Street Realty made a prima facie showing that it was a bona fide purchaser by demonstrating that it had paid valuable consideration for the property, in good faith and without knowledge of any alleged fraud by Liu … . Real Property Law §§ 266 and 291 protect the title of a bona fide purchaser for value who lacks knowledge of fraud by the grantor or affecting the grantor’s title … . 44th Street Realty’s submissions established that it had no knowledge of facts that would lead a reasonably prudent purchaser to inquire about possible fraud … . Matter of Shau Chung Hu v Lowbet Realty Corp., 2018 NY Slip Op 03529, Second Dept 5-16-18

​REAL ESTATE (APPARENT AUTHORITY, FORMER PRESIDENT OF THE CORPORATION WHICH OWNED AN APARTMENT BUILDING HAD THE APPARENT AUTHORITY TO SELL THE BUILDING, BUYER WAS A BONA FIDE PURCHASER (SECOND DEPT))/REAL PROPERTY LAW (BONA FIDE PURCHASER, APPARENT AUTHORITY, FORMER PRESIDENT OF THE CORPORATION WHICH OWNED AN APARTMENT BUILDING HAD THE APPARENT AUTHORITY TO SELL THE BUILDING, BUYER WAS A BONA FIDE PURCHASER (SECOND DEPT))/AGENCY (APPARENT AUTHORITY, FORMER PRESIDENT OF THE CORPORATION WHICH OWNED AN APARTMENT BUILDING HAD THE APPARENT AUTHORITY TO SELL THE BUILDING, BUYER WAS A BONA FIDE PURCHASER (SECOND DEPT))/CORPORATION LAW (APPARENT AUTHORITY, FORMER PRESIDENT OF THE CORPORATION WHICH OWNED AN APARTMENT BUILDING HAD THE APPARENT AUTHORITY TO SELL THE BUILDING, BUYER WAS A BONA FIDE PURCHASER (SECOND DEPT))/APPARENT AUTHORITY (REAL ESTATE, FORMER PRESIDENT OF THE CORPORATION WHICH OWNED AN APARTMENT BUILDING HAD THE APPARENT AUTHORITY TO SELL THE BUILDING, BUYER WAS A BONA FIDE PURCHASER (SECOND DEPT))/BONA FIDE PURCHASER (REAL ESTATE,  FORMER PRESIDENT OF THE CORPORATION WHICH OWNED AN APARTMENT BUILDING HAD THE APPARENT AUTHORITY TO SELL THE BUILDING, BUYER WAS A BONA FIDE PURCHASER (SECOND DEPT))