Lis Pendens
A notice of lis pendens is filed to provide constructive notice to third parties when there is pending litigation concerning the identified property, when the title to the property may be clouded and when any interest acquired in the property after the filing of the notice will be subject to the outcome of the litigation. Once a lis pendens is filed the public is considered to have been given notice of the lawsuit.
Can a lis pendens provide a notice of a foreclosure?
A lis pendens serves the same function in a judicial foreclosure that a Notice of Trustee’s Sale provides in regard to a non-judicial foreclosure of a deed of trust. As part of a non-judicial (out of court) foreclosure of a deed of trust (“the trustee’s sale on the court house steps”) a document called a Notice of Foreclosure is filed in the real estate records notifying interested parties of a possible upcoming foreclosure sale. If for some reason a lender feels that it is more beneficial to foreclose the deed of trust in court (a judicial foreclosure) or in the case of the foreclosure of a mortgage (which unlike a deed of trust can only be foreclosed in court) a lis pendens may be filed in the real estate records providing notice of the pending judicial foreclosure. Investors interested in pre-foreclosure properties may search the real estate records looking for either a notice of an upcoming non-judicial foreclosure (Notice of Sale) or a lis pendens providing notice of a pending judicial foreclosure in a designated court.
What is the effect of providing constructive notice?
Any buyer, lender or other person who acquires an interest in the real estate that is the subject of a recorded lis pendens will be bound by the ultimate result of the pending lawsuit whether or not they had any actual knowledge of the lawsuit.
Example 1:
Sam is sued by next door neighbor Mary who claims that she owns part of Sam’s property because a portion of her garage and her fence encroach over the common boundary line. Mary files a lis pendens in the real estate records describing Sam’s property and referencing the lawsuit. Sam sells his property to Tom but does not mention the lawsuit. Tom does not get title insurance and he does not know how to examine the real estate records himself. He buys the property with no actual knowledge of the lawsuit. When Mary wins the case and part of Tom’s property is awarded to her, he has no remedy except to sue Sam for damages.
Example 2:
Betty signs a contact to sell her property to Mike. Betty later believes that Mike has breached the contract so she enters into a contact to sell to Patrick instead. Patrick plans to get a purchase loan from his parents. In the meantime, Mike files a suit to enforce his contact with Betty and Mike records a lis pendens describing Betty’s property and the lawsuit, Patrick may lose the property to Mike and Mike’s parents will lose their security for the loan.
Does a lis pendens prevent a sale of or loan on a real estate?
Technically, no. Practically, yes. Most prospective buyers, lenders and title insurers are very reluctant to become involved with property that could be adversely impacted by a pending suit.
Can a lis pendens be filed without filing a lawsuit?
No, by definition, it is a notice of a pending lawsuit.
Is a lis pendens a lien on real estate?
No, By itself, it does not create a lien.
How long does a valid lis pendens stay in the real estate records?
If the suit seeks relief relating to the real estate itself, the court will normally refuse to strike it absent a decision in favor of the property owner, whether by summary judgment or trial. Thus, a lis pendens can, from a practical perspective, tie up property for years. That may, of course, be devastating for the owner and enormous leverage for the claimant. Some courts have been willing to strike a lis pendens when its filer failed to diligently pursue the underlying suit.