Dishonest Notaries Can Escape Civil Liability After 6 Years

A dishonest notary can corrupt the chain of title of real property with a void deed by falsely notarizing the forged signature of the grantor. If the forged deed goes undetected for 6 years or more from the date of the forgery, then the statute of limitations bars any civil claims against that dishonest notary.

Under Code of Civil Procedure section 338(f)(3) there is a 6 year statute of limitations for all claims against notaries, whether it’s negligence or fraud. While section 338(f)(1) states that any cause of action based on fraud is deemed not to have accrued until the discovery of the facts by the aggrieved party, section 338(f)(3) states that, notwithstanding the discovery provision in paragraph 1, any action against a notary must be commenced within 6 years of the notary event.

The rigidity of the 6 year statute was upheld by the Court of Appeal in the decision of Purdum v. Holmes (2010) 187 Cal.App.4th 916. There, the appellant did not learn that a notary had falsely notarized his forged signature to a grant deed until 5 ½ years later in a quiet title action. Appellant filed his lawsuit against the notary 9 days after the expiration of the 6 year period. The DCA held that the appellant’s claim was barred by the 6 year statute.

This means that a dishonest notary who assists in the creation of a void deed in the title chain escapes liability from the innocent grantee that happens to acquire the property years beyond the 6 year statute. Since the void deed conveys no title, the post 6 year grantee not only acquires no title to the property, but he or she has no legal recourse against the crooked notary. However, title insurance will usually cover the grantee’s loss.

This scenario happened to one of our clients who acquired a trust deed on a parcel and ultimately title to the parcel through foreclosure. Our client was named as a defendant in an intra-family lawsuit wherein the parents accused their son of forging his parents’ names to a grant deed transferring title in the same parcel to their son. The notary who falsely notarized the void grant deed, while named as a defendant, would’ve escaped liability completely had the case gone to trial, rather than settle as occurred in this case. The notary’s carrier paid a nominal sum, along with the other defendants, to avoid trial.

But the fact remains that a dishonest notary who assists in the creation of a void transfer that infects the subsequent chain of title can escape liability if the void transfer is not discovered and a lawsuit filed within the 6 years. This case illustrates the value of title insurance in bearing the risk of loss when such title anomalies occur.