Problem.Equitable liens

     Hoping to evade the limtations imposed under state usury law, state foreclosure law, and federal truth in lending law, Hard Money Associates (HMA) gave Naivety $5,000 in exchange for a grant deed in which Naivety conveyed its fee simple interest in her residential real property to HMA.  HMA recorded the deed.  At the time, HMA orally agreed to allow Naivety to continue living at the residence if Naivety paid HMA rent of $400/month. HMA also orally agreed to reconvey the fee simple interest in the property to Naivety if Naivety made all rent payments for a period of 5 years and paid all annual property taxes for the property.

     Three years later, when Naivety was on an extended out of town visit to nurse an ailing relative, HMA, which held a set of keys to the property, listed the property for sale. HMA told the listing broker that the property was currently being rented under a month-to-month tenancy to someone who was out of town. Ostrich bought the property for $250,000, an amount about $25,000 less than the price for comparable properties in the area.

     Upon Naivety's return, Ostrich gave Naivety a 30 day notice to quit. Upon Naivety's refusal to quit, Ostrich brought a summary unlawful detainer action. Naivety has consulted you for legal advice. You are aware of state law (such as Cal. Civ. Code 19) that where a person "has actual notice of circumstances sufficient to put a prudent man upon inquiry as to a particular fact, [that person] has constructive notice of the fact itself in all cases in which, by prosecuting such inquiry, he might have learned such fact." What advice do you have?