I recently read a question posted at “Google Answers” by a troubled property owner who explains that he inherited vacant property that is encumbered by a deed of trust. The property owner has written correspondence indicating the note was paid however the reconveyance was not completed and/or recorded. The writer indicates the beneficiaries are deceased.*

This is not the first time I've encountered this situation, which is one example of clouded title. Land Title Services defines "clouded title" as an irregularity, possible claim or encumbrance that, if valid, would adversely affect or impair the title.**
This particular property owner wanted to develop the property and was hoping someone could offer a suggestion to remove the cloud on title. The suggestions include: make a public notice calling for an open claim, searching for persons believed to be deceased, and initiating court action to quiet title. One well-written comment offered what I believed to be good advice.

The writer suggested the property owner contact title insurers in his county. The writer seemed to believe that a title insurer will insure over such issues if you do have documentation that the note was paid, and even suggested Chicago Title does provide this type of coverage.
I consulted with a senior title officer and an advisory title officer with Chicago Title and learned that it would be highly unlikely that an insurer would insure over the deed of trust. However, the solution seemed to be simple. Lisa Linebarger, Advisory Title Officer at Chicago Title in Santa Rosa California suggested the property owner purchase a lost note bond from a surety brokerage firm such as Artisan Bonding & Insurance Services. The bond amount needs to be for 1 ½ times the original amount of the note and trust deed. When the bond is issued it will need to be recorded. The recorded bond and a certified copy of the deed of trust should be provided to the trustee along with your request for a full reconveyance.