Facts: The adult child of a commercial property owner forges the owner’s name and obtains a mortgage secured by a trust deed on the property without the owner’s knowledge. The adult child defaults on the mortgage and the property owner receives a Notice of Default (NOD). The owner enters into a forbearance agreement with the lender and agrees to a repayment plan. More than three years after receiving the NOD, the property owner files a quiet title action, but is denied due to the three-year statute of limitations (SOL).
Claim: The property owner seeks cancellation of the trust deed lien by quiet title action, claiming the lien is fraudulent and their quiet title action is not subject to the SOL since the SOL only applies to disputed or disturbed possession, and their possession of the property was not disturbed by the NOD.
Counterclaim: The lender claims the owner may not pursue quiet title action since delivery of the NOD disturbed the owner’s possession of the property and triggered the SOL, which expired before the owner filed the quiet title action.
Holding: A California court of appeals holds the owner’s quiet title action is not barred by the SOL and cancels the forged trust deed lien since an NOD does not dispute or disturb an owner’s possession of property and thus, does not trigger the SOL. [Salazar v Thomas (May 1, 2015) ______ CA4th ______]