Derivative Title Law and Legal Definition
Derivative title is a title that is acquired from another person. A person gains such a title when an already existing right is transferred to a new owner.
A derivative title differs from an original title. When the acquisition is original, the right thus acquired to the thing becomes property, which must be unqualified and unlimited, and since no one but the occupant has any right to the thing, s/he must have the whole right of disposing of it. On the other hand, in the case of derivative acquisition, it may be otherwise, for the person from whom the thing is acquired may not have an unlimited right to it, or s/he may convey or transfer it with certain reservations of right.
Derivative titles include all titles that are not original. The two general classes of derivative title are:
Title by descent.
Title by purchase.
The term ‘derivative title’ may also refer to the general principle that a transferee of property acquires only the rights held by the transferor, and not anything more than that.
The following is an example of a case law referring to the derivative title principle:
PROPERTY -- DERIVATIVE TITLE PRINCIPLE -- PRECLUSION EXCEPTION. -- The Uniform Commercial Code provides that a purchaser of goods acquires all title which his transferor had; however, one of the exceptions to this derivative title principle is the preclusion exception, which holds that irrespective of the property holder's actual title -- void, voidable or good -- there will be times when the original owner's behavior does not justify allowing him to dispute the property holder's title; therefore, the purchaser of the property will win, not so much on his own behalf but rather due to the original owner's procedural inability to force the contrary results. [Wood v. Corner Stone Bank, 315 Ark. 200 (Ark. 1993)].