The title examiner in Oregon prepared the preliminary report, but did not reflect the owner as the Smacker Family Trust, and instead, back–vested to the previous owner Leo Young as trustee of the Leo Young Trust because the deed from the Leo Young Trust to the contract seller was uninsured, meaning the transfer was not recorded or insured by a title company.
The public record indicated Leo Young acquired the subject property with his wife in 1976. They divorced in 1981 and the court awarded the property to Leo Young.
In 2008, Leo Young signed a quitclaim deed conveying the property to himself as trustee of his trust. The 2008 quitclaim deed included an attachment with recitals regarding Leo Young's trust. The recitals state Leo Young's successor trustee is Leo Young, II.
Leo Young died in 2010. The title examiner found no probate in his search and did not find an obituary for Leo Young.
The next recorded document is the deed to Smacker Family Trust in 2017. The deed to the Smacker Family Trust was recorded on a California grant deed form, not a form widely used to convey property in the State of Oregon.
A general warranty deed is used to transfer an interest in real estate in Oregon in most real estate transactions. This grant deed was signed by a Manny McMahon as successor trustee of Leo Young's trust, and appeared to have been acknowledged and notarized in the State of Arizona.
Robin Lorenzini, the escrow officer in Fidelity's Clackamas, Oregon office, who was charged with closing the transaction, contacted the Arizona Secretary of State to obtain information about the notary on the grant deed.
She initially intended to contact the notary to determine whether the notary's journal included an address or other contact information for Manny McMahon. The Arizona Secretary of State confirmed there was no contact information and there has never been a notary public in Arizona with the name shown on the grant deed.
Coincidentally, the trustee of the Smacker Family Trust lived in California. Robin requested the seller provide contact information for the grantor, Manny McMahon. The trustee of the Smacker Family Trust stated she no longer knew how to reach McMahon, and she provided Robin with a signed notarized appointment of successor trustee for the Leo Young Trust.
The appointment was signed by McMahon, appointing himself as successor trustee. The appointment is not recorded, and it appeared to have been acknowledged and notarized in California.
Robin then contacted the State of California and learned the notary named on the appointment of trustee was not commissioned in California. In addition, the commission number shown on the California notary stamp belonged to a different notary public whose commission was expired.
The seller — Smacker Family Trust — had provided a trust agreement to Robin. The trust agreement for the Smacker Family Trust was notarized using the same altered California notary stamp.
With all the discrepancies and red flags, Robin knew things with this transaction were wrong. There was no way the Smacker Family Trust could be the legitimate owner of the property. She contacted her legal counsel, Pat Ihnat, and together they asked the seller for additional information.
The seller immediately suggested the transaction be terminated with a full refund of buyer's earnest money. After the conversation ended the seller contacted the buyer to cancel the transaction altogether.
The buyer contacted the Company's legal counsel inquiring about the reason for the seller's cancellation. Pat explained the results of the research and the reasons Fidelity was unwilling to insure through the deed into the Smacker Family Trust. The buyer is now trying to locate the heirs of Young so they can be referred to an attorney to regain title to the subject property.
For all her effort in discovering the counterfeit notary seals and signatures, escalating her findings to legal counsel and for ultimately halting the transaction, Robin has received a reward of $1,500 and a letter of recognition from the Company.
MORAL OF THE STORY
Always pay attention to the kinds of discrepancies that were present in this transaction and do not be afraid of escalating these issues to your underwriting counsel for additional instructions. Had the Company accepted the documentation and closed the sale, eventually the Young Family heirs would have sought to have the title of the property restored to their family and a claim submitted to the Company.