Facts: An investor arranges to purchase a property at a foreclosure sale in partnership with two investment companies. A trustee’s deed is prepared naming the first investment company as 75% owner, the second investment company as 25% owner and the investor as a grantee with no specified ownership interest. The trustee’s deed is altered prior to recording, removing the investor’s name and leaving only the investment companies named as co-owners. Later, the first investment company quitclaims to the second company, and the second company then sells the property to a buyer without the knowledge of the investor.
Claim: The investor seeks to quiet title to the property, claiming the buyer’s interest in the property is void since the trustee’s deed was tampered with prior to recording and therefore the transfer of title to subsequent purchasers is invalid.
Counterclaim: The buyer seeks to retain title to the property, claiming the deed remains valid as the alterations made to it are immaterial since the investor is named merely as grantee with no specified share of interest in the property on the original trustee’s deed.
Holding: A California Court of Appeals held the buyer may retain title to the property, since the alteration of the trustee’s deed prior to recording was not material to the function of the instrument and thus the deed, and the buyer’s title to the property, are valid. [Lin v. Coronado (2014) ___ CA4th ___]