Jay Thompson (PhoenixRealEstateGuy) wrote an informative post, What is a Lis Pendens?
As he correctly points out, a Notive of Lis Pendens (meaning Notice of Pending Action) is a nasty little legal document filed against real property (like a mortgage or lien), which acts as constructive notice to the public that a claim exists affecting a specific piece of real property (not a cooperative apartment). A Notice of Lis Pendens is filed with the County Clerk at the courthouse in the county where the real property is located.
The practical problem for the owner of the property with a lis pendens filed is it creates a “cloud” on the title, making it extremely difficult to sell or refinance the propery until the lis pendens is removed— standard sale contracts provide that title must be “marketable”, eg., free and clear of liens and encumbrances, before a buyer is obligated to perform, i.e. pay the money and take title. A title company will not insure the property with a lis pendens. OK, that’s the bad news.
Now the good news– Here are the various ways to remove a Notice of Lis Pendens.
1. Motion to Expunge a Defective or Invalid Lis Pendes. First, you must hire an attorney. No if, ands or buts. The first thing an attorney will do (after taking your check for his retainer) is determine if the notice of lis pendens was properly filed. Since a lis pendens must comply with all the requirements of a statute, any misstep in the process is fatal to the little bugger. It could be procedurally or substantively defective. For example, if a lis pendens does not properly identify the property, it is void. If an affidavit of service is not filed, it’s legally doo-doo.
The pending case must also allow for a lis pendens to be filed. These include easement, divorce or adverse possession claims, among others, but not a claim having nothing to do with the subject real property — some misguided folks think if they file a notice of lis pendens, they can exert pressure for a settlement of any debt owed by the homeowner. Big mistake.
Most states provide that a wrongfully (falsely) filed lis pendens is grounds for assessing money damages, including attorneys fees, against the knucklehead who improperly filed it. Damages could include the lost profits from a lost sale.
The best way to handle a clearly improper or defective lis pendens is a certified letter to the filer and a call from your lawyer putting the other side on notice that failure to promptly undo the nonsense will cost the client (you) money and a trip to the courthouse where the idiocy will be revealed, at great risk of monetary compensation, to a judge much tougher than Judge Judy.
The procedure to remove the Notice of Lis Pendens is commonly known as a motion to “expunge” and it, too, is governed by statute. This means it must not be entrusted to any yahoo— use a lawyer.
NOTE: It is not uncommon for a lis pendens to remain on property after a judgment has been paid in full. It is carelessness on the part of the attorney who may have filed it properly but did not remove it when required by law. Bad kitty.
2. Post a Bond. Many states allow the lis pendens to be “expunged” if a bond is posted by a surety or insurance company when the claim involving the property is ultimately for money damages, and not actual title or possession. For example, if the lis pendens was filed by a contractor suing to foreclose a mechanics lien for nonpayment for your new house addition, that may be bonded to guarantee payment to the contractor if he wins, while releasing the title cloud on the property, allowing the owner to sell or refinance the property. If you can post a bond, everyone’s butt is covered. If, on the other hand the case involves a claim of ownership of residential property (eg. a spouse, next of kin), you will not be able to get a bond.
NOTE: Alternatively, an owner may make a motion to the court to have the filer of a lis pendens post a bond to provide a means for the owner to collect damages in the event the lis pendens was filed wrongfully. A motion is a formal written request for a judge’s order to do something– “Sir, you are hereby ordered to remove that dang lis pendens (gavel strikes).”
3. Pay the Claim or Settle the Action. If the claim is legitimate, pay it. Once paid, a Withdrawal of Pendency of Action (or similar type document) must be filed to remove the lis pendens. Settlement of a disputed claim will also result in the withdrawal filing. Make sure the settlement documents expressly reference the withdrawal of the lis pendens ASAP so no one can later claim any misunderstanding.
4. Motion to Dismiss the Action. If the action is clearly frivoulous or, as a matter of law, the case is a loser, a motion to dismiss the underlying action will be granted. (This may also be done via the motion to expunge. However, the underlying suit is not expunged via the motion, just the LP). Without a lawsuit pending, the lis pendens must be withdrawn. Failure to remove the lis pendens after the case is dismissed will definitely get a book thrown at somebody.
5. Try the Case and Win. This is obvious. If you win the case upon which the lis pendens was predicated there no longer exists a basis for its filing. Bye bye lis pendens.
There you have it.
A Final Note: The expungement of the lis pendens is not an automatic all clear for the owner. A period of time must elapse to allow for any appeals.
DISCLOSURE, DISCLAIMER AND DIS AIN’T SOMETHING YOU CAN RELY ON: Since I am only licensed to practice law in the great states of New York and Texas, and since I don’t know the facts of your case and, most importantly, since you haven’t paid me a red cent, you have no sane basis to rely on this post for legal guidance. It merely consists of my opinion to the faceless crowd. If on the other hand, you send me my standard retainer of $25,000 (you can use PayPal) we can get down to the nitty gritty and I will put my legal butt on the line for you. For example, I could show you how a homeowner might file a notice of lis pendens against their bank threatening foreclosure to really gum up the works and have them negotiate with you. Like TruZilla VoiceAdvice, you get what you pay for.
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