California Real Estate Lawyers Blog
The general rule is that a bona fide purchaser of California real estate for value who acquires their interest in the property without knowledge or notice of another’s rights or interest in the property takes the property free of such unknown interests. The usual way a purchaser receives notice is through recorded documents – mostly learned about in California by receiving a Preliminary Title Report, which the buyer receives if they are going to obtain title insurance. The way to research recorded documents is through the index – the recorder indexes documents by the names of the parties. The buyer’s title insurer searches for the names listed in the owner’s deed But sometimes the recorded documents do not all have the exact same names but some variation thereof. In a recent decision, when it came to names, the court said close, but no banana (some might say cigar). The buyer obtained the property free and clear of plaintiff’s liens because then names were not close enough and they did not have notice.
In Vasquez v. LBS Financial Credit Union, LBS had recorded Abstracts of Judgment against “Wilbert G. Guerrero.” Years later The Vasquezes bought property from “Guillermo Guerrero,” who was the same individual subject to the judgment. In the Guerrero – Vasquez purchase & sale documents were numerous versions of Guerrero’s name, including one handwritten reference in the 10-page purchase agreement to the name Wilbert Guillermo Guerrero. Guerrero’s cursive signature on page 10 appears to be either “Guillermo Guerrero” or “Guillermo Guerrero W.” The name “Wilbert Guillermo Guerrero” is handwritten below Guerrero’s signature, where the form specifies to “[p]rint name. In the counteroffer Guerrero signed the acknowledgment and acceptance twice. One signature appears to be “Guillermo Guerrero W.,” and the second appears to have the same signature, except it is not discernable whether the name is followed by a “W.” “Guillermo Guerrero. The Title report stated the Guerreros’ interest in the property was vested in “Guillermo Wilbert Guerrero and Laura Olivia Guerrero, husband and wife as joint tenants.” The report identified a deed of trust in the amount of $198,000 to secure a note for borrowers “Guillermo Wilbert Guerrero and Laura Olivia Guerrero, husband and wife as joint tenants.” The report also identified three tax liens against “Guerrero[,] Guillermo” and a 2008 abstract of judgment for $16,312.38 against “Guerrero Construction and Development, Inc. and Guillermo Guerrero.” The preliminary title report did not identify the LBS abstracts. LBS wanted their money, and this lawsuit ensued.
The Court first noted that the bona fide purchaser without notice may seek a legal determination through a quiet title action that the title it obtained remains free and clear of any adverse interest in the property. Constructive notice of a lien or other interest in property arises from the proper recording of that interest.
The law conclusively presumes that a party acquiring property has notice of the contents of a properly recorded document affecting such property; ( Civ. Code, § 1213) “The party has constructive notice of only those matters that could be located by a diligent title search.” The key is indexing of the documents – it depends upon proper indexing because a subsequent purchaser should be charged only with notice of those documents which are locatable by a search of the proper indexes.
A purchaser may also have constructive notice of a fact affecting his or her property rights where the purchaser “ ‘has knowledge of circumstances which, upon reasonable inquiry, would lead to that particular fact.’
In addition, notice of an adverse interest may be imputed to a purchaser from knowledge acquired by her or his agent acting within the course and scope of the agent’s authority.
Here, LBS did not dispute that Vasquez did not have notice from recorded documents. It argued that they had actual notice due to Guerrero’s use of the first name Wilbert because the purchase agreement contained the handwritten name Wilbert Guillermo Guerrero on page 10. The Court said no, and listed the evidence that indicated otherwise:
-Guerrero signed the purchase agreement and the counteroffer as Guillermo Guerrero or Guillermo Guerrero W.
-the typed name Guillermo Guerrero is listed three times on the counteroffer.
-some form of Guillermo Guerrero appears repeatedly on the documents in the chain of title and those relating to the sale of the Domo property to the Vasquezes, without any other reference to Wilbert as a first name.
-The name Guillermo Guerrero appears on the grant deeds recorded in 1999 and 2015,
-the name Guillermo Wilbert Guerrero is on the grant deed recorded in 2004.
-The additional escrow instructions bear the typed name Guillermo Guerrero, and Guerrero signed his name as Guillermo Guerrero W. Guerrero’s statement of information lists the seller as Guillermo Guerrero and was signed as Guillermo Guerrero W.
-The preliminary title report states title to the property is to be vested in “Guillermo Wilbert Guerrero and Laura Olivia Guerrero.”
-The preliminary title report also lists three tax liens against Guerrero Guillermo and an abstract of judgment recorded against “Guerrero Construction and Development, Inc. et al. and Guillermo Guerrero.”
LBS did not collect its judgment.
Photos:
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