You've probably heard of a "lis pendens" but may not be sure of its meaning. Because it can be a very powerful tool that helps or hurts you, it makes sense to know more about it.
What does it mean? In Latin, it means "pending lawsuit." In modern usage, it means a notice of a pending lawsuit that is recorded in county real estate records.
Who records it? It's usually filed by a plaintiff, but it can be filed by a defendant that is pursuing a counterclaim.
What's its purpose? A lis pendens provide notice of a claim involving specific real estate to potential buyers and lenders, as well as the general public.
What's the effect of providing that notice? Any buyer, lender or other person who acquires an interest in the real estate after a lis pendens is recorded is bound by the ultimate results of the pending suit. An example: Marge signs a contract to sell land to Homer. Marge believes Homer has breached the contract, so she signs a contract to sell it to Bart. Before the closing of the sale to Bart, Homer sues Marge to enforce the sale to him. At the same time, he files a lis pendens. Bart closes anyway. A year later, the court determines that Homer is entitled to enforce the sale. Bart loses the property to Homer, and Bart must now try to get his money back from Marge.
Does a lis pendens prevent a sale of or loan on real estate? Technically, no. Practically, yes. Most prospective buyers, lenders and title insurers are very reluctant to become involved with property that could be adversely impacted by a pending suit.
What information must be included in a lis pendens? The court in which the suit was filed; the name of the parties to the suit; the time the suit was filed; a description of the real estate; and a statement of the relief sought that relates to the real estate.
Can a lis pendens be recorded for any suit in which the underlying transaction or events relate to real estate? No. Significantly, a lis pendens is appropriate only when the suit seeks relief directly relating to that real estate. Classic examples include suits for specific performance of real estate contracts, cancellation of deeds and establishment of title by adverse possession. Importantly, but often overlooked, they also include suits requesting relief relating to physical conditions on real estate—for example, a suit requesting that the owner of adjacent property be required to take steps to prevent unlawful runoff onto the plaintiff's property. If a suit seeks only money and no relief relating to the real estate itself, a lis pendens is inappropriate, even though the damages sought arise from a real estate transaction or otherwise relate to real estate.
What if someone files an unauthorized lis pendens? If the suit seeks only damages or other relief that does not directly relate to the property, the court, upon request by the property owner, should strike the lis pendens.
How long does a valid lis pendens stay in the real estate records? If the suit seeks relief relating to the real estate itself, the court will normally refuse to strike it absent a decision in favor of the property owner, whether by summary judgment or trial. Thus, a lis pendens can, from a practical perspective, tie up property for years. That may, of course, be devastating for the owner and enormous leverage for the claimant. Some courts have been willing to strike a lis pendens when its filer failed to diligently pursue the underlying suit.
Does the recording of an inappropriate lis pendens constitute slander to title? The simple answer is that it depends on other factors, such as the intent of the recorder and the existence of damages. It is not a good idea to record one unless you are confident that your claims justify it.
What if the suit relates only to part of real estate but the lis pendens covers all of it? Depending on the circumstances, a court may limit the coverage of the lis pendens.
Can a lis pendens be filed without filing a lawsuit? No. By definition, it is a notice of a pending lawsuit.
Is a lis pendens the only way to provide notice to the public of a claim relating to real estate? No. A title affidavit can be recorded, but it arguably involves a higher risk of triggering a suit for slander to title than a lis pendens.
Is a lis pendens a lien on real estate? No. By itself, it does not create a lien.
Can a lis pendens properly be recorded in order to provide notice of a pending arbitration? The Georgia law addressing lis pendens only refers to suits. However, courts would probably be reluctant to strike a lis pendens premised on a pending arbitration, as long as the underlying claims otherwise justify a lis pendens. Some lawyers avoid this concern by filing a suit, even though the claims are subject to arbitration. As a practical matter, this approach generally works because, unfortunately, the Georgia Arbitration Code only allows a court to stay, not dismiss, a suit containing claims subject to arbitration.
The good news is that a lis pendens is a powerful tool that you may be able to use against someone else. The bad news is that a lis pendens is a powerful tool that someone else may be able to use against you. Either way, it's helpful to learn a bit about it.