Robertson

We are faced with the question whether under California law a husband’s occupation of his family residence with his second wife *419 can create a duty in a bona fide purchaser for value or a bankruptcy trustee to inquire as to whether his former wife still retains the ownership interest in that property that appears of record. Guided by reality, our answer is yes.

I. Factual and Procedural Background

Debtor Sheila Weisman (formerly Sheila Peters) married defendant Marc Peters in 1963. They bought a house, which is the subject of the instant dispute, in Campbell, California in 1967. The couple lived in the Campbell residence until March 1985, when Sheila Peters moved out. The couple’s marriage was dissolved that fall, but the judgment of dissolution was not recorded. Pursuant to their property settlement, Marc Peters had the right to purchase his former wife’s interest in the house they had previously shared. He did so by refinancing and using the loan as the purchase price. However, the lender required Sheila Weisman, who had married debtor Marc Weisman in November 1985, to remain on the title to the property.

As a result of the refinancing transaction, title to the Campbell…