Lis Pendens is a formal notice recorded with the local county recorder that puts the world on notice that there is pending legal action regarding a specific piece of real property. The lis pendens is filed with the clerk of the court and then filed with the proper Arizona county recorder. It must be filed subsequent to the beginning of a lawsuit surrounding the property in question.
Lis Pendens and Law Suits
In order to record a lis pendens there must be an ongoing lawsuit. A lis pendens, is Latin for “pending lawsuit.” In other words, it is a notice to the world that there is a lawsuit regarding title to that real estate. A lis pendens is not a lien and it cannot stop someone from selling or getting a loan secured by real property. However, it usually does effectively deter others from buying, selling or borrowing money because it means the ownership rights to that property are in question.
What is the Purpose of a Lis Pendens?
A lis pendens provides notice of a claim involving specific real estate to potential buyer, lender, and the general public. It will basically freeze an Arizona property so that it cannot be sold or refinanced.
The Purpose of a Lis Pendens is Basically Threefold:
1. Notice to third parties– Recording a lis pendens puts anyone searching title on notice that ownership or rights to the property are being litigated. A buyer, lender, or title company can’t later say they were unaware of the dispute.
2. Preserving the court’s power over the property– Without a lis pendens, a defendant could sell, transfer, or encumber the property during the lawsuit and potentially frustrate the court’s ability to grant meaningful relief. The lis pendens ensures that whoever takes an interest in the property does so subject to the outcome of the case.
3. Binding future purchasers or lienholders to the result– Anyone who acquires an interest in the property after the lis pendens is recorded is bound by the judgment, just as if they had been a party to the lawsuit from the start.
What is the Effect of a Lis Pendens?
Any future person who acquires an interest in the property after a lis pendens is recorded is bound by the ultimate results of the pending lawsuit. So even though the lis pendens doesn’t legally prevent a sale or loan, from a practical point it does. As such, prospective buyers, lenders and title insurers are very reluctant to become involved with property that could be adversely impacted by a pending suit.
Release of Lis Pendens
In Arizona, a lis pendens is typically removed by filing a Release of Lis Pendens with the Court and then the county. This is a voluntary act made by the party that recorded and filed the lis pendens in the first place, and usually occurs as a result of the settlement of the litigation or some other agreement between the litigants.
Wrongfully recording a lis pendens can result in statutory and actual damages against the filing party. Therefore, it is important to hire an attorney who is familiar with these laws and has experience with litigation involving a lis pendens
If you have a real estate dispute and need help from an experience Arizona real estate lawyer then contact the Dunaway Law Group at 480-702-1608 or by sending us a message HERE.