WHAT IS A,
“LIS PENDENS,” AND WHEN IS IT
people dealing with real property transactions have heard of a, lis pendens,
but most of them don’t understand what they are, or how to use them properly. When things go wrong, they often come to a
lawyer and ask for a lis pendens to be filed against a piece of real estate.
Many times, even lawyers make serious mistakes by wrongfully recording a
lis pendens against a property. Let's see what a lis pendens is; how this
tool can be used effectively to help someone with a real estate problem, and
how it is frequently misused.
Lis Pendens is latin for Notice
of Pending Litigation. It means that a
lawsuit has been filed in Court. A lis pendens gives the whole world Notice -
that if anyone takes title to this property today, a Court may find later that
someone else owns that property, and you could lose your money.
The Notice tells you that a person has filed a lawsuit
to recover that property from the person who currently holds what appears to be
legal title. If you are going to buy a piece of property, or receive it in
exchange for something else, and you discover that a lis pendens has been recorded,
it’s probably time to consult a real estate lawyer. Even though you have
purchased the property, if the person who filed the lawsuit wins their case,
they will have superior rights to the property, and they will own it instead of
you. For this reason, Title Insurance Companies will not issue a title policy if a lis pendens
has been recorded.
it proper to record a lis pendens? (1)
Only when a lawsuit has been filed, and (2) if the lawsuit is successful,
the parties who filed the lawsuit will receive title to the property at the end
of the lawsuit. One example would be where someone was cheated into
deeding their property to someone else by fraud. While the fraud claim is
being litigated, a lis pendens prevents other people from buying the property
from the person who committed the fraud (so that the person who committed the
fraud cannot run away with the money). After the fraud case is completed, the
Court may issue an Order, which states that the fraudulent deed is void (has no
legal merit), and qranting (quieting) title back to the person who was
it improper to record a lis pendens? When a party suffers damages, but money
would make them whole, a lis pendens is inappropriate. The person filing the lawsuit MUST get title
to the property if they win their lawsuit.
Otherwise, money would fix the problem, and you would not want to file a
lis pendens. California Courts
frequently award sanctions against anyone who ties up someone else's property with
a lis pendens, when that person will
not get title to the property
if they win their lawsuit.
Here’s another example. Let's say that you wrongfully record a lis
pendens against my home, because you believe that I owe you money from a real
estate commission. While your lawsuit is going forward to recover your
commission, I apply for a loan against my home, so that I can use the money to
save my business, which really needs the cash right now to meet a deadline like
paying off an existing loan. So I apply to 4 different lenders and cannot
get the loan against my home, because of your lis pendens being recorded
against it. My business loan comes due, and now I can't pay off the
business loan solely because you interfered with my ability to get a home loan –
by recording your wrongful lis pendens. You could be responsible for the damages
I suffered (the loss of my million dollar business when I could not get that
home loan). You caused me to suffer the caused by your wrongful conduct. Most of the time, the damages are just the
attorneys fees required to bring a Motion to expunge (remove) the lis pendens
from the chain of title.
This article is not intended to be legal advice for your particular
situation. If you need legal advice on a
real estate or business matter, feel free to contact our office for a free
telephone consultation (949) 709-5800.
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