A person purchased real estate and recoded a cautionary note. Another person claimed to be the owner, and not the seller, and that the rights, as shown on the extract from the land registry, were recorded by fraud and therefore the cautionary note must be removed.
Israel Land Law sets that the purchaser of a right in regulated land against consideration and in reliance in good faith on the land registry, the power of the purchaser's will prevail even if the registration was incorrect (a rule known as "Marché ouvert"). The Court held that it was proven that the purchaser did not act in good faith because at the date on which it was possible to record the right of ownership under his name at the land registry he had doubt as to identity of the rightful owner of land. Additionally, it was not shown that he paid full consideration for the land or that the transaction was effected by recording. Accordingly, the right of the rightful owner of the land prevailsand that the ownership rights of the land are to be register under his name.