12 Dec Lis Pendens: Their Meaning, Use, and Impact
A notice of a lis pendens (Latin for “suit pending”) is an instrument filed in the real property records of a county that indicates a civil lawsuit is pending that involves a dispute concerning title to real property. As explained in greater detail below, a lis pendens protects a claimant’s opportunity to recover title to property should it prevail in the litigation. See Group Purchases, Inc. v. Lance Investments, Inc., 685 S.W.2d 729, 731-32 (Tex. App.–Dallas 1985, writ ref’d n.r.e.). A lis pendens notice ensures that a judgment entered in a pending suit is enforceable regarding the real property in the hands of a subsequent transferee as if the property were still owned by the litigant-transferor. A lis pendens is, functionally, the same as an involuntary lien because it clouds title under Texas law. F.D.I.C. v. Walker, 815 F.Supp. 987, 990 (N.D. Tex. 1993). From a practical standpoint, the filing of a notice of lis pendens makes it difficult (or impossible) for the property owner to sell its interest since any purchaser will be bound by the judgment even though they are not joined in the action. Group Purchases, Inc., 685 S.W.2d at 731-32.
If a party is seeking affirmative relief which includes the assertion of a claim involving title to real property, the establishment of an interest in real property, or the enforcement of an encumbrance against real property, a notice of lis pendens should be promptly filed with the county clerk where the property is located to provide notice that the action is pending. Tex. Prop. Code § 12.007(a). The party filing the lis pendens or the party’s agent or attorney must sign the lis pendens, which must include:
(1) the style and number, if any, of the proceeding;
(2) the court in which the proceeding is pending;
(3) the names of the parties;
(4) the kind of proceeding; and
(5) a description of the property affected.
Tex. Prop. Code § 12.007(b). The county clerk is required to file the notice in a lis pendens record and index the record in a direct and reverse index under the name of each party to the proceeding. Tex. Prop. Code § 12.00(c). The recorded lis pendens is “notice to the world” of its contents. Tex. Prop. Code § 13.004(a). The notice is effective from the time it is filed for record and does not depend on whether the other parties to the lawsuit have been served with process. Id. A purchaser of an interest in real estate is expected to check the lis pendens index before closing a purchase of real estate, because the purchaser will be charged with notice of, and will be bound by the judgment entered in litigation identified in the lis pendens notice filed regarding the real estate. It is important to know that if a notice of lis pendens is not recorded under the party’s name in the county (or each county) where the property is located, the transfer or encumbrance of real property subject to the lawsuit from a party to the lawsuit to a third party who has paid valuable consideration and who does not have actual or constructive notice of the proceeding is effective. In layman’s terms, a good faith purchaser for value without notice of the lis pendens is not bound by a later a judgment even if the proceeding results in a judgment against the party transferring or encumbering the property.
Texas courts have treated the filing of a lis pendens as part of the judicial process and, accordingly, that a party impacted by an improperly filed lis pendens—e.g., a dispute that does not involve title to real property—is not entitled to a claim or suit for the recover of damages that might occur as a result of the lis pendens being filed. Bayou Terrace Investment Corp. v. Lyles, 881 S.W.2d 810, 818 (Tex. App.–Houston [1st Dist.] 1994, no writ). While I understand and agree with the courts’ reasoning, this bar on claims stemming from litigants’ ability to cloud their opponent’s title is troublesome. Many attorneys have taken advantage of this bar and filed notices of lis pendens in suits that do not involve title to real property, such as cases where damages are purely monetary in nature. While the Property Code does provide a mechanism for the court to remove an improperly filed lis pendens, the costs associated with doing so are usually not recovered by the party seeking the removal of lis pendens. In the most egregious of cases, courts have imposed sanctions against parties who have “weaponized” lis pendens to gain an advantage in litigation; however, those instances are rare. Ultimately, the decision regarding whether a lis pendens is appropriate is made by the court which should confine the decision to a review of the parties’ pleadings. First Nat’l Petroleum Corp. v. Lloyd, 908 S.W.2d 23, 25 (Tex. App.–Houston [1st Dist.] 1995, orig. proceeding).
If you find yourself involved in a dispute that concerns title to real property or the enforcement of an encumbrance on real property it is critical to move quickly to ensure your rights are protected and interests preserved. We will gladly assist in assessing your claims or defenses and navigating you through the uncertainties surrounding litigation involving real property.
ABOUT THE AUTHOR: Scott F. Seidl is Counsel at Rapp & Krock, PC in the Litigation group and the Probate, Estates, Elder Law, and Trusts group.
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