The Language of Real Estate
Good Faith
Bona fide; an act is done in good faith if it is in fact done honestly, whether negligently or not.
Good faith is a legal and ethical concept that generally refers to acting honestly, fairly, and with sincere intentions in one’s dealings and interactions. It is often used in various legal contexts, including contracts, negotiations, business transactions, and more.
Acting in good faith implies a sense of integrity, trustworthiness, and a genuine desire to fulfill obligations, uphold agreements, and avoid taking advantage of others.
The recording laws are designed to protect a good-faith purchaser.
Most antidiscrimination laws require a broker to transmit all good-faith offers to lease or buy.
Many states add a requirement of good faith for a person to acquire title to someone else’s real property by adverse possession.
RESPA requires a Good Faith estimate of costs likely to be incurred on a real estate loan.
In business relationships, good faith can involve disclosing relevant information, being transparent about intentions, and striving to achieve mutually beneficial outcomes.
If one party can demonstrate that the other party acted in bad faith (with dishonest or deceitful intentions), it might lead to legal consequences, such as breach of contract claims or other remedies.
Sometimes an act done in “bad faith” is punishable as a crime. For instance, if an investor-borrower applies for an owner-occupant loan and lies about his intent to occupy, this type of falsehood is punishable as a misdemeanor under the National Banking Act.
