What is a Lis Pendens
A lis pendens is an affidavit filed in the real property records noting that there is a pending dispute in the court system over the title to the identified real property. This will stop a purchaser from obtaining bona fide purchaser status. Essentially this would mean that the purchaser could buy the property, but it would be subject to the dispute over the property, and the purchaser would be at risk of losing both his money and the property. It is very important to note that a lis pendens can only be filed if there is pending civil litigation where title or interest in the real property is being decided. For instance, a buyer suing for specific performance when a seller has breached a contract by not closing because they want to sell the property to another buyer for more money would likely be a situation where a filing a lis pendens would be proper. However, If the same buyer was only suing the seller for monetary damages, and not to obtain title to the property, a lis pendens would be improper. Further, even if money from the sale of property may be in dispute, a lis pendens is not appropriate. It is very unlikely that a title company would close a transaction and issue a title policy on a property where a lis pendens has been filed. The lis pendens is to only be used when disputing an actual interest in the property, and improperly filing a lis pendens could make the filer liable for damages for clouding an owner’s title as described below.
Removing a Lis Pendens
A properly filed lis pendens attached to a lawsuit will last the length of the litigation, unless the court expunges it during the trial. Thus, the final ruling of the court will determine the parties’ interest in the property, and the final ruling will remove the cloud on title. Further, if a lis pendens has been filed on the property, the owner of the property can motion the court to expunge the lis pendens if an interest in the property is not in dispute, if the plaintiff fails to provide evidence that shows a likelihood of success to their claim, or the plaintiff fails to properly notify the other party of the lis pendens. This will shift the burden onto the filing party to demonstrate that a preponderance of the evidence shows that their claim to an interest in the property is valid. There is a lot of mischaracterization of the usefulness of a lis pendens. The general public and even some attorney’s do not understand the limited scope and purpose of a lis pendens. Some examples of cases where we have helped clients who have suffered from the improper usage of a lis pendens include where a plaintiff threatened to file a lis pendens in the property records when the threatening party is not even claiming an interest in the property and another when the owner of the property is not even subject to the litigation, and the plaintiff clearly had no interest in the property. A well written attorney letter can help clear up these situations and protect an owner’s property interests.
Penalties for Falsely Clouding Title to Property
Wrongfully filing a lis pendens on another’s property can have significant consequences. Doing so is actually a criminal offense under Penal Code §37.01. Further, the Texas Civil Practice & Remedies Code Section 12.002 states that a person who fraudulently files a lien or claim of interest on real property could be subject to a fine of $10,000 or actual damages if greater, exemplary damages, and recovery of attorney’s fees and costs. Also Rule 13 of the Texas Rules of Civil Procedure provides for sanctions brought for law suits that are ”groundless and brought in bad faith or groundless and brought for the purpose of harassment.” A lis pendens can be a valuable tool to help protect property interests. However, whether you are considering filing suit to claim an interest in the property held by another, or you are being threatened with such, it is a good idea to seek legal advice to make sure that your interests are being properly evaluated and protected.