Some states don't title or license dirt bikes. California is not one of those states. Some owners from out of state never bother to get a title here, and some people who lose a title don't want to pay the DMV for a replacement, so it could be an honest mistake.
Most guys who lost the title but knew they wanted to sell the bike would have just sucked it up and went to the DMV to get a replacement. So unless the guy is a recent arrival from out of state, I would be very suspicious.
But no way I would buy a non-titled bike in CA unless I was certain it was not stolen, and the only way to do that is to have the VIN checked and cleared.
If you do buy a stolen bike because you fail to take precautions, I can only hope the rightful owner gets it back from you ASAP. If my bike ever got stolen, I would have no sympathy at all for whoever got caught with it.