What is a lis pendens
A lis pendens is a document filed in a lawsuit and recorded by the clerk in the public records. It creates a cloud on title to real property. It is specifically authorized in Florida by Section 48.23 of the Florida Statutes.
What is a lis pendens of right The lis pendens of right is based on a recorded lien or other recorded instrument. A mortgage is a good example. It is recorded in the official or public records of the county where the property is located. It is security for a promissory note. If the note is breached, then commonly the mortgage holder will sue to foreclose the mortgage lien.
But the filings in the lawsuit are maintained by the clerk of court and the public records where the deed lives is something different. The lis pendens in the public records connects to the deed and notifies the world of the lawsuit that affects the property. So the lis pendens is really just an efficient and effective was to connect the clerks lawsuit file with the public records. The most important distinction is that no bond is required to maintain a lis pendens of right.
What is a garden variety is pendens The garden variety lis pendens does not have a recorded instrument but is allowed under certain circumstances and within the discretion of a judge. An example is where one party under a written contract loans another money to buy land. The agreement says that title will include the lender but the borrower omits the lender from the deed. If the lender sues for a constructive trust those facts may prove the nexus and allow for a lis pendens on the property. Normally the process is done through an evidentiary hearing which is like a mini-trial. If the proponent prevails, they must post a bond to maintain the garden variety lis pendens. The judge determines the amount of the bond, which is usually also done at the evidentiary hearing.
What does a lis pendens do The effect of a lis pendens, whether of right or garden variety, is to notify prospective buyers of a claim against property in a pending lawsuit. The lis pendens also protects the claimant from losing their right to the property to a subsequent purchaser.
Does a lis pendens prevent someone from buying land Contrary to popular belief a lis pendens does not actually prevent the owner from selling the property. The titleholder can still sell the land and transfer the deed, but most title companies will not provide insurance and closing agents may not close without the lien being bonded. Also, a buyer who purchases property subject to a lis pendens may inherit the lawsuit.
So in reality, while a lis pendens does not technically prevent a land sale, the average buyer likely will not buy the parcel. This is true because the lis pendens will prevent them from obtaining clear title and preclude them from becoming a bona fide purchaser.
What happens if a lis pendens is wrongful A wrongfully filed lis pendens can be removed by the judge in the case in which it was filed. The party seeking to remove it must file a motion and address why the lis pendens is improper under Florida law.
Improperly filing a lis pendens can subject a party to liability. That liability can include punitive damages. Thus, is it prudent to seek the advice of a Board Certified expert before buying property or filing a lis pendens.
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Written by David Steinfeld
Check out business lawyer David Steinfeld online for helpful videos and articles on Florida business law, real estate disputes, and electronic discovery solutions for your business. This article is provided for informational purposes only.