When is a Lis Pendens Appropriate?
I often get questions from clients about whether a lis pendens can or should be utilized in their case. A lis pendens is a Latin term meaning “a pending lawsuit” and can be a powerful tool in preserving real estate during a lawsuit. There must first be a lawsuit filed involving real estate in some way.
Purpose of a Lis Pendens
The purpose of a lis pendens is to give the public notice that a lawsuit is pending that affects title to real property. It puts would-be purchasers, lenders and others on notice because the lis pendens contains a legal description of the property and is recorded with the county recorder, which shows up on a title report. Based on that notice, anyone who acquires property with a lis pendens recorded takes that property subject to the outcome of the lawsuit. In other words, whatever is decided in the court proceedings may be binding on the purchaser or lender who became involved with the property after the lis pendens was recorded. For this reason, recording a lis pendens often has a very detrimental effect on the marketability of the property. The lis pendens itself is not a lien, but it often has a similar effect on the property it is recorded against. Accordingly, many battles have been fought over the appropriateness of a lis pendens.
When a Lis Pendens is Appropriate
Most of the debate about when a lis pendens is appropriate centers around whether the underlying lawsuit truly “affects title” to real property as required by A.R.S. § 12-1191. Many lawyers and courts have differing opinions on the subject. Some Courts have interpreted this language broadly, meaning any lawsuit to determine rights “incident” to title. Other Courts have interpreted the term “affects title” more narrowly. Recently, the Arizona Court of Appeals addressed the propriety of a homeowner association’s filing of a notice of lis pendens in a case in which the association sought injunctive relief against a homeowner for violation of the association’s governing documents. See Santa Fe Ridge Homeowners’ Association v. Bartschi, 219 Ariz. 291, 199 P.3d 646 (App. 2008). The Court held that where the homeowner association was not seeking to expand, restrict or burden the rights of a homeowner, but simply to require the homeowner to do something that she was required to do pursuant to the CC&Rs, the filing of a notice of lis pendens was not proper.
There are Penalties for a Wrongful Lis Pendens
A lis pendens can be a very powerful tool in a lawsuit to protect and preserve real estate while a lawsuit is going on. It costs very little to record one. Yet, the recording of a lis pendens should not be taken lightly. Because of its effect on the marketability of title, one should always consult with a licensed Arizona attorney to determine if a lis pendens is appropriate in a particular matter. There are serious penalties for anyone who knowingly records a groundless lis pendens, which will be discussed in future articles.
This article is not intended to be specific legal advice. It only provides general legal information. You should consult an Arizona licensed attorney if you have a legal issue. The Bainbridge Law Firm, L.L.C., is experienced in this area of law and are available for consultation. You may contact our Phoenix office at 602-902-1930.