There are several issues raised by your post.
If the record owner is conveying a deed of trust, the language in a confidential settlement agreement may not matter because it is unlikely that the title company will ever see it. However, the issue it raises is whether the person conveying the deed of trust has the ability to convey the property and whether there is someone out there who may have a claim to ownership. If you are aware of the trust, you claim would likely not survive a challenge by the person who was defrauded.
You may be better off letting the adverse possession action proceed to judgment.
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Unless you have a reputable title insurance company willing to insure your title based upon this settlement, I would have great concern for you.
Did you file a lawsuit seeking title by adverse possession, and did you serve all possible defendants?
You really ought to have an attorney review the proposed settlement agreement. A confidentiality clause seems quite odd for an adverse possession claim.
Frank W. Chen has been licensed to practice law in California since 1988. The information presented here is general in nature and is not intended, nor should be construed, as legal advice for a particular case. This Avvo.com posting does not create any attorney-client relationship with the author. For specific advice about your particular situation, please consult with your own attorney.
I see several problems with respect to you gaining "clean title." You may have eliminated the defendants you mention but you cannot eliminate the “whole world” through a settlement with only the named defendants.
I assume you have filed suit and recorded the necessary notice of pendency of action. Given the facts you now know, i.e., that the individual on title claims title was procured by fraud -- you may have an obligation to further research the record title to discover additional defendants to name in the quiet title action.
In any event, you will need a default prove-up hearing and will need to prove your claim including that you have paid taxes on the property for 5 years. See my blog post: No Default Judgments in Quiet Title Cases: Period
Since you will need to prove your title the confidentiality clause in the settlement agreement may make that difficult as may the assertion that title in the name of the present holder of record was procured by fraud.
I strongly suggest you have an attorney familiar with quiet title actions review the present facts of the case with you. Good luck.
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