Criteria for bad faith acquirer in property vindication

Abstract

The relevance of the study is due to the amendments to the Civil Code of Ukraine introduced by the Law of Ukraine of 12 March 2025 No. 4292-IX, aimed at strengthening the protection of a bona fide acquirer. The study is based on the hypothesis that, despite the legislative reinforcement of the presumption of good faith, the Supreme Court has developed a system of albeit non-exhaustive, criteria capable of rebutting that presumption. To verify the hypothesis, an analysis of the current case law of the Supreme Court was applied, together with the comparative legal method involving the provi­sions of the Draft Common Frame of Reference (DCFR) and the methods of generalisation and classification. The study identifies and systematises the criteria of an acquirerʼs bad faith according to three stages of a transaction: pre-contractual (affilia­tion or connectedness with the transferor, failure to meet the standard of reasonable diligence (KYC), refusal to physically inspect the property), contrac­tual (repeated alienation of property within a short period, an undervalued price, indefinite deferral of payment), and post-contractual (absence of actual control over the acquired property (so-called Buchbesitz, or "paper ownership"), passive conduct regarding the property and in litigation). It is established that the standard of reasonable diligence is higher for business entities than for individuals. A comparative analysis with the DCFR revealed a fundamental difference in approaches: while the Civil Code of Ukraine presumes the acquirerʼs good faith, the DCFR places the burden of proving good faith on the acquirer itself. It is concluded that establishing an acquirerʼs bad faith is a question of fact, the burden of proving which rests with the claimant, and that the list of relevant criteria is non-exhaustive and continues to evolve in judicial practice.