A third party purchases trust property from a self-dealing trustee in good faith without knowledge of the self-dealing. What is the trust's remedy against the third party?

• A. The trust has no recourse against the third party as a bona fide purchaser
• B. The trust can sue the third party for damages
• C. The trust can rescind the sale and take the property back
• D. The trust can impose personal liability on the third party's heirs

Answer: (A)

The key idea is that a third party who buys trust property from a trustee who is self-dealing in good faith and without knowledge of the breach is a bona fide purchaser for value. Such a purchaser takes title free of the trust’s claims, so the trust cannot recover the property or impose liability on the third party. The trust’s remedy, if any, lies with the trustee personally for breach of fiduciary duty (and possibly to recover misappropriated funds or to trace value), not against the third party who acted in good faith. If the third party had notice of the self-dealing or was not acting in good faith, different rules could apply. In this scenario, the third party’s protection as a bona fide purchaser for value means there is no recourse against them.