Legal Definitions - holder in good faith

A holder in good faith is a person who acquires property or an instrument without knowing that there is any problem with its ownership or title. This means that the person is not aware of any defects or issues that could affect their legal rights to the property or instrument.

• John buys a used car from a dealership. He has no reason to believe that there is any problem with the car's title, and the dealership has provided him with all the necessary paperwork. John is a holder in good faith.
• Sarah finds a lost wallet on the street and turns it in to the police. She does not know who the owner is or whether there is any money or valuable items inside. Sarah is a holder in good faith.

These examples illustrate the concept of a holder in good faith because both John and Sarah acquired property without any knowledge of defects or issues that could affect their ownership rights. They acted in good faith and did not knowingly participate in any illegal or fraudulent activities.