I came across the following sentence in chapter ten of "Dragonwings" by Laurence Yep:
"They looked shocked, as if not believing that all of this could happen to them. I could not help remembering what fine houses and mansions had once been there, and ..."
I have a problem with "could happen" in this context. I believe it should be "could have happened".
Here is an example sentence that I found in a similar context, and it is from a reliable source: BBC Home:
"Later in the evening small groups of older folk wandered around not quite believing that this could have happened in their own town.
Here's a related link.