Sounds like sensationalism.
In the East Coast states, it is common to use an attorney to confirm validity of signatures, which here in California is done by a Notary Public. I believe the attorney is also used to perform escrow services, but not the title search.
In the story, it must have been some type of uninsured quit-claim-deed, where someone gives up his/her right to a property subject to all existing liens in favor of another person. Therefore, the lender was not notified.
Obviously no title insurance in that transaction, so the victim could only sue the attorney. Who should have insurance taking care of it.
Here’s something that was shared with me earlier this week. It happened in California. It also involves a fraudulent document (deed of trust = loan), but much more sophisticated, and the goal was much lower – delaying a sale so that the criminal could squat (!!) longer.
"I was a buyer for the property, it was a trust sale and also a short sale in El Sobrante. The property was vacant since the owner’s death.
Short sale was approved , but the lender was breathing down our neck with their ridiculous timeline.
While in escrow one day we visited the property and found locks changed and all windows covered with sheets from inside.
We (I and the agent) called police, locksmith and administrator of the trust immediately.
Administrator was not aware of anything. He, police and locksmith arrived, locks were drilled and we entered the house.
No one was there, just some garden tools inside, no damage. We put the tools outside and changed locks. The burglars never came back inside.
About the same time I received prelim which showed certain deed of trust for $50k or so. The signature on the deed was of an owner who passed away months before the date of the deed. I verified that by obtaining a death certificate from the county. I also contacted the notary whose seal was on the document.
She said she had never notarized it.
Armed with these documents showing forgery of the deed on its face I called the title co.
They pretty much told me they would not insure the title.
At that time I contacted my attorney, very practical guy.
He in turn contacted attorneys for the title co, whom he knew, and they agreed to insure the title with the exception of that deed.
After closing escrow my attorney filed some action in court to clear the title. While this was in process one day he had an idea of sending a letter to a person on the deed (somehwere back on the east coast). To our surprise we got a response.
He claimed he was an innocent victim of identity theft, already having severe problems with IRS due to that. He did not want to have any more problems and was willing to sign a notarized reconveyance. And he did. This was enough for the title company to clear that lien. So this is how it all ended.
*We notified the DA in the meantime, they started their own investigation. *
I do not know if the break in and forgery were related, but I think they were.
Someone wanted to cloud the title so the short sale lender would foreclose.
That would have given them time to live on the property for free and maybe grow pot.
So it was a pretty involved scheme.
The sad twist to that whole story was that few days after receiving the reconveyance, my attorney suffered a debilitating stroke and the court paperwork had to be finished by his professional insurance."