Legal Question in Real Estate Law in California

I'm not sure what you are talking about "separated" the note from the deed of trust, but I cannot think of anything that could be described that way that would deny the note holder their security and give you any right to quiet title.

First, the law does not recognize "separation" of the liability or obligation and the collateral. The collateral follows the obligation, as a matter of law.

Next, there is a widespread superstition in California that a foreclosing lender must be able to produce the original note in order to foreclose on the note. This is untrue. In the absence of the note, the foreclosing lender can obtain a bond from a bondsman to protect the borrower from loss, should the foreclosing lender's claim of right to foreclose turn out to be erroneous.

Also, the lender could elect to sue in court for judicial foreclosure rather than use a trustee's sale. The lender's lawyer will then put you on the witness stand and ask you, under oath, whether you signed a note, and whether you paid it off. If you lie and say there is no note, the judge will ask why there is a recorded deed of trust, signed by you, that refers to a note. One way or another, the existence of a note signed by you, but unpaid, will be proven to the satisfaction of the judge or jury. Then the property will be foreclosed and the court will consider whether you go to jail for perjury.

So, bottom line, if you don't pay the note, you'll be foreclosed upon, whether the note is lost, burned, shredded or whatever.

The only thing that remotely approaches what you are asking is when the debt is transferred expressly without the security interest. The deed of trust forms the security for the promissory note, and cannot be separately transferred, as the deed of trust is deemed to follow the transfer of the promissory note by operation of law. Transfer of the debt (promissory note) expressly without the security interest constitutes a waiver of the security interest. (Kelley v. Upshaw (1952) 39 Cal.2d 179.)