Diana discovers that the seller of her California home forged a deed from the previous owner to himself before selling to her. Diana's CLTA title insurance policy was issued at the time of her purchase. Even though Diana acted in good faith, the true owner demands return of the property. Under California law, which statement is MOST accurate?
Correct Answer
B) The true owner can reclaim the property because a forged deed is void and passes no title, but Diana's title insurance will compensate her for the loss
Under California law, a forged deed is void ab initio (from the beginning) and cannot pass title, even to a bona fide purchaser. Unlike a voidable deed (fraud, undue influence), a void deed passes nothing. However, Diana's CLTA title insurance policy covers losses from forgery, so the title company will compensate her up to the policy amount for her loss.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Recording is the act of placing a document in the public records at the county recorder's office to give constructive notice to the world of an interest in real property. Recording protects the holder's interest against subsequent claims.
A special warranty deed guarantees that the grantor has not caused any title defects during their period of ownership, but does not warrant against defects that existed before the grantor acquired the property.
Title insurance is a policy that protects the insured party against financial loss from defects in title that were not discovered during the title search. Unlike other insurance, it covers past events rather than future risks.
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A California preliminary title report is issued in connection with a residential sale. Which of the following items would MOST likely appear as a standard exception in that report?