What Is A Lis Pendens?

Lis Pendens is the Latin phrase for pending litigation. More commonly, a lis pendens is referred to as a “notice of pending action”. Persons who buy or lend on real estate after a lis pendens has been recorded take the property subject to the claimant’s right, if any, to the real estate. The lis pendens, when recorded, is a notice warning all prospective buyers or encumbrances that title to or possession of the real estate is in dispute.

Preservation of Title – The purpose of a recorded lis pendens is to preserve rights to the real estate until the dispute with the owner is resolved. Without the recording of a lis pendens, the person claiming an interest in title or possession to the real estate runs the risk that the owner will encumber or convey (sell or transfer title) the property to an individual who is unaware of the dispute.

When another buyer or lender obtains an interest in real estate before they become aware of a dispute over title, the claimant in the dispute loses their right to title or possession of the real estate.

Proper Use of Lis Pendens – A lis pendens affecting title is recorded with the County Recorder office only if the lawsuit it references involves a claim to a right in title or possession of the real estate, or the use of an easement other than one obtained by statute from a regulated public utility.

Title companies usually refuse to insure title free of a lis pendens recorded against the title. Thus, buyers may not want to buy and lenders may not want to lend on the property. As a result, the property is often rendered unmarketable while the lis pendens is in effect – especially on specific performance actions by buyers. The tremendous value of the lis pendens to litigating buyers is in its ability to preserve the buyer’s right to purchase and to persuade a hedging seller to perform. Accordingly the potential for misuse or abuse of the lis pendens procedure is readily apparent and has been a problem for the courts. Therefore, be aware that only specific types of lawsuits are proper subjects for recording a lis pendens. Primarily the lawsuit must affect title or right of possession of the real estate or the use of specified easements.

Correct Claims – If the owner contests a lis pendens which clouds title to his/her property, the claimant filing the lis pendens must prove that both:

1. This action affects title to or the use of an easement or the right of possession of the property described in the notice.
2. This action was filed for a proper purpose and in good faith and is likely to be successful at trail. In other words, the claimant must establish the probable validity of the claim.

The party recording the lis pendens has the burden of showing these two elements exist. If these two requirements are not established, the lis pendens will be ordered expunged and will no longer effect title of the referenced property.

A typical misuse or abuse is when a buyer uses a lis pendens attempting to “tie-up” the property over a contract terms dispute (not title or possession related) trying to put pressure on a seller to sell at a reduced price or give in to a certain term(s) issue. A contract terms dispute is not a proper purpose for using a lis pendens this misuse or abuse may come at a high cost.

The courts have been known to issue stiff fines payable to the court system to parties who have abused the lis pendens procedure. In addition the owner may also have a basis for a counter suit against the party recording the lis pendens if damages to the owner have been caused by the abuse of the lis pendens procedure.

Editor's Note: Don't let this Lis Pendens stuff scare you. In the combined 30 something years of our Team's experience with hundreds and hundreds of escrows and closings we have never had even one court action of any kind.