- Guarantees and security
This chapter illustrates how a person who acquires a legal interest in good faith and without notice takes priority over the holder of an equitable interest. The person acquiring the legal interest must provide value and not have actual or constructive notice at the time that the interest was acquired. If, however, the interest, when acquired, was initially equitable, the holder of the interest can at a later date acquire the legal interest and gain priority over the holder of a prior equitable interest, despite the fact that at the time the legal interest was acquired, the holder knew of the prior equitable interest. This is the doctrine of tabula in naufragio.
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