Wen purchased an automobile from Nick for $10,000. Unknown to Wen, Nick had used the automobile as security for a loan from his bank, and the bank had registered its security interest in the automobile under the provincial personal property security registration legislation. A few months after the sale, Nick defaulted on the loan, and the bank discovered that Wen was in possession of the automobile. Wen has a good and clear title to the automobile, because he purchased it without knowledge of the bank's claim.

Question

Quizplus · Accepted Answer

Wen does not have a good and clear title to the automobile because the bank's security interest, having been properly registered, takes precedence over Wen's claim, regardless of Wen's knowledge of the claim at the time of purchase.

Wen Purchased an Automobile from Nick for $10,000