Altered or forged deeds are subject to some specific rules in California. In some cases, where it is altered by a party to the deed, they may be declared void, and of no effect. If it is altered by a third party, it is not entirely void – it is still valid as between the original parties. In a recent decision, The person who should have been an owner of property did not consult a Sacramento real estate attorney, and misunderstood what a deed actually said. When it was improperly altered before recording, the result did not change the effect of the conveyance – she had no interest in the property.
In Lin v. Coronado, Lin pooled her $150,000 with $100k provided by River LLC and Elevation LLC to buy a residential property at a trustee’s sale. The property was bought by the LLCs for $250,000. The original deed from the trustee was to “Cal-Western Reconveyance Corporation (herein called trustee) does hereby grant and convey, but without covenant or warranty, express or implied to RIVER FOREST FINANCIAL LLC 75%, ELEVATION INVESTMENTS 25% HELEN LIN.” However, the deed that was recorded states “Cal-Western Reconveyance Corporation (herein called trustee) does hereby grant and convey, but without covenant or warranty, express or implied to RIVER FOREST FINANCIAL LLC 75%, ELEVATION INVESTMENTS 25%.” Lin was not named in the recorded deed. River LLC and Elevation sold the property to Coronado, the defendant in this appeal.
Lin filed suit against River & Elevation for fraud, and also against Coronado, the buyer, to quiet title. Regarding the quiet title, she claimed that the deed was altered after it was executed, it was void, and thus did not convey title. The buyer claimed that Lin never had an interest in the title in the first place, so they were a bona fide purchaser for value, and the claim failed. The Court agreed with the buyer.
When a deed is altered or changed by someone other than the grantor before it is delivered or recorded, and the alteration is without the grantor’s knowledge or consent, the deed is void and no title vests in the grantee or subsequent purchasers, even bona fide purchasers for value; and if the deed is altered after delivery by the grantee before recordation, the deed is void and conveys no title to the grantee.
However, the court found that in this case”…the only alterations which will affect the validity of an instrument are those which are material; that is, alterations which change the legal effect of the instrument.” The test for determining the materiality of an alteration is “not whether the liability of either of the parties is increased or decreased or reduced as a result but whether the instrument has the same legal effect after the alteration as it had before.”
Here, in the original declaration of trustee’s sale, Lin had no percentage interest in the property. Recording a deed without her name on it had no legal effect. Thus, the alteration – removing Lin’s name from the deed – was not sufficiently material to render the deed void. Lin had no claim against the title to the property. Lin also tried to have the court reform the deed to reflect her interest. But the court could not do that because it was not shown to be void. Civil Code section 3399 allows reformation “so far as it can be done without prejudice to rights acquired by third persons in good faith and for value.” Here, Coronado was a good faith purchaser, and reformation would prejudice her rights.