Lis Pendens: Put the World on Notice of Your Claim
When there is a dispute about the title (ownership) of a property, the last thing you need is for the property to be sold. You have hired your attorney, filed your lawsuit, and are battling to get the property back. To discourage and prevent property from being sold during these situations, the Texas Legislature created the Notice of Lis Pendens in section 12.007 of the Texas Property Code.
What Is a Notice of Lis Pendens?
A lis pendens (more accurately titled a “Notice of Lis Pendens”) is an affidavit filed in the real property records where the property in dispute is located, which announces that a lawsuit involving the real property is pending in a certain court.
In general terms, the lis pendens does two things:
- Protects the filing party’s alleged rights to the property that is in dispute in the lawsuit
- Gives those who may be interested in the property notice of the lawsuit
Lawsuit Must Truly be About Title to the Property
A Notice of Lis Pendens states that a pending lawsuit involves one of three things:
- Title to real property
- Establishment of an interest in real property
- Enforcement of an encumbrance against real property
For this to be true, the lawsuit must actually seek to recover title to the real property (or enforce the encumbrance). In short, the property itself must be the subject of the lawsuit.
If the lawsuit doesn’t actually change or alter the property’s title, then most likely a lis pendens is not proper. For instance, a lawsuit seeking monetary damages that could be recovered through obtaining title to the property is not a lawsuit about title to the property. In this case, a lis pendens would not be appropriate.
Statutory Requirements for a Notice of Lis Pendens
A Notice of Lis Pendens must strictly comply with the requirements listed in section 12.007(b) of the Texas Property Code. This means that if any of the requirements are not met, a court may invalidate the notice of lis pendens.
The party filing the lis pendens (or the party’s agent or attorney) must sign the lis pendens and include the following information:
- The style and case number of the lawsuit
- The court in which the lawsuit is proceeding
- The names of the parties
- The kind of proceeding
- A description of the property affected
Upon filing, the county clerk records the Notice of Lis Pendens in the property records. Within three days of filing/recording the lis pendens, the person filing must serve a copy of the notice on each party to the lawsuit who has an interest in the real property affected by the notice.
Why is Lis Pendens Important?
A lis pendens helps discourage future sales or transfers of the property at issue. Although a lis pendens is not a lien, it usually discourages potential buyers because it gives constructive notice of the litigation. Without a means to provide notice to the world of your claim to the property, a third-party could purchase the property…leaving you no means of getting it back.
If a third-party purchases the property for valuable consideration without notice of the disputed claim or prior interest, then the buyer takes the property free of that claim or interest. (This is called a bona fide purchaser.) In short, you would lose your claim to the property and the bona fide purchaser keeps the property free and clear. The lis pendens prevents a party involved in a title dispute from simply selling the property to another person to get rid of the dispute/litigation.
If the third-party buyer does not have notice of your claimed interest to the property, you will be unlikely to reclaim the property from him. The buyer becomes known as a bona fide purchaser: one who purchases a property for value and without notice of a claim to the property. The bona fide purchaser defense allows the third-party to maintain its ownership to the property – even if you have a legitimate claim and prevail.
(One note here: even without a lis pendens on file in the real property records, if a prospective purchaser actually knows about the lawsuit involving title to real property, then they cannot claim to be a bona fide purchaser!)
How Long Does a Lis Pendens Last?
A notice of lis pendens only operates during the duration of a lawsuit. Once the lawsuit terminates, so does the notice of lis pendens. However, a timely appeal or motion for new trial extends the operative effect of the lis pendens. They key is that there must be an underlying lawsuit for the lis pendens to be effective; a lis pendens is not a stand-alone claim.
How Can I Fight a Lis Pendens?
It is possible to cancel or expunge a notice of lis pendens while the underlying lawsuit is still pending. Section 12.0071 of the Texas Property Code provides a method for expunging the notice of lis pendens if:
- The pleading on which the notice is based does not contain a real property claim.
- The claimant fails to establish the probable validity of the real property claim by a preponderance of the evidence.
- The person who filed the notice did not serve a copy of it on each party required to receive notice under the statute § 12.0071(c).
Is There a Penalty for Wrongful Filing of a Lis Pendens?
The Texas Property Code does not grant an express penalty for filing a wrongful or fraudulent lis pendens. However, courts have interpreted § 12.008 of the Texas Property Code to also apply to lis pendens filings.
Additionally, because lis pendens are associated with lawsuits, the standard rule regarding for groundless and frivolous pleadings in Rule 13 of the Texas Rules of Civil Procedure applies. This rule provides for sanctions if lawsuits are “groundless and brought in bad faith or groundless and brought for the purpose of harassment.”
Section 12.002 of the Texas Civil Practice and Remedies Code establishes liability relating to a fraudulent lien or claim against real or personal property. Since a lis pendens may be viewed as a type of a lien, section 12.002 establishes a cause of action against a filer if the lis pendens is determined to be fraudulent.
Are There Changes on the Horizon for Lis Pendens?
The Texas Supreme Court is currently considering a case that will alter the notice effect of an expunged notice of lis pendens. Stay tuned on the blog for a discussion of this case and an update on the proposed legislation relating to it.