I had a similar situation when I bought my Z. The car was originally in a guys name, but he died and passed the car on to his grandson. The grandson never transferred the title and then sold the car to me. I just went to the DMV and explained the situation. They wrote the papers like I had bought the car from the old guy, but was late transferring the title. They charged me a fee but it was only a couple bucks.
So I recommend you go to the DMV and ask them what you should do.