Legal Question in Real Estate Law in California

Contact the title company that issued your title policy and let them deal with this issue.

Actually, if it was recorded after the date of the title policy, the title company will do nothing, because they did not insure against it. Technically, if the grant deed from the previous owners to you was recorded before the deed of trust, the deed of trust is invalid and of no effect unless by some odd course of events the previous owners come to own the property again. However, it is a cloud on title and as such if wrongfully recorded, as you say, then recording it and refusing to release it is a slander on title which you can sue to have removed and for any damages it may have caused you (though unless it blocks a sale of the property or something like that, you are unlikely to have much damages).

I agree with Mr. McCormick. A deed of trust recorded after the trustor has conveyed the property to a bona fide purchaser does not bind you or encumber the property. The issue that I see is whether or not you are a bona fide purchaser.