More often than not it's Title who writes the check. The buck should have been stopped at the Title Officers desk when the Title Company's research department could have caught this.
I've worked within the income restricted condos near Salt Creek Beach and with each of the deals I had, everyone knew which were restricted and which were not. The other units I had experience with were in Azusa, but not heard anything yet there. The deed restrictions were always very well documented. Title catches these things when clearly available. The Colorado cases seem like an issue with potentially unrecorded addendums. Not clear yet in this article (to me at least) if these addendums were always recorded or held by the seller.
During the crisis, I did see plenty of low priced homes in Costa Mesa listed as "Fee" ownership, when they were in fact "leased land". That's an intentional misrepresentation and if not caught, the blame could fall on any number of people in the transaction - but again, the $$$ would most likely come out of the title company who wrote the policy.
It seems like the problem did stem from weak documentation rules, zero Government oversight, lazy agents, and auto pilot title companies. Some title companies who handled the sales may no longer exist so there may not be the deep pockets available to unravel this problem other than what litigators can get out of the Government.
Imagine being one of these 300 plus sales being given a short window to sell at a loss. A wipeout for some. A potential windfall for those who lawyer up early on.
My .02c
