Legal Question in Real Estate Law in California

Grant Deeds are used to transfer title to real property while Deeds of Trust are used to evidence an encumbrance of real property; two completely different animals. In either case once signed Grant Deeds and Deeds of Trust are valid forever. In the case of a Deed of Trust, once the underlying debt (represented by the promissory note) is repaid, a request for full reconveyance is recorded which releases the lien.

Recording does not affect the validity of a Grant Deed nor a Deed of Trust. Recording is simply a method by which the world is put on notice of the existence of title to the property or the existence of an encumbrance against a property. In the case of a Deed of Trust, at least in California, recording affects the rights of the owner of the Deed of Trust as against other liens which may be recorded. For instance, if Bank of America failed to record a deed of trust against your home, and the owner of a subsequent loan recorded a Deed of Trust (or a creditor recorded a judgment lien), Bank of America would be in "lower priority" to the lien(s) recorded before it's deed of trust.

If you tried to sell the house you would have the same problems you are having with your refi and yes, you are correct, if you were able to sell and "run off" with the $246,000.00, Bank of America would sue you.

You should make an appointment with a real estate attorney in your area to discuss this problem in more detail, and to have that attorney review all of the documents you have concerning this situation. You may be able to bring a suit for specific performance or declaratory relief to obtain "clear title" to the property or force the bank to record their encumbrance.

Your post doesn't make any sense.