Deciphering the “Lis Pendens“

Seattle real estate attorneys, real estate brokers, and escrow companies deal with the “lis pendens” from time to time, and many people are not sure what it means. The Latin definition is simply: notice of a pending lawsuit.

The Revised Code of Washington defines “lis pendens” as an “instrument having the effect of clouding the title to real property, however, named, including consensual commercial lien, common-law lien, commercial contractual lien, or demand for performance of a public office lien.” RCW 4.28.328 (1)(a). Is recording a lis pendens, thus, a violation of the owner’s procedural due process, i.e., the right to notice and an opportunity to be heard?

Not according to Cranwell v. Mesec, 77 Wn. App. 90, 890 P.2d 491 (1995), where the court determined that unlike a lien, a lis pendens is not a significant property interest, and though “substantial economic effects” may result from it, the effects do not “constitute a significant enough deprivation by the state so as to require that the landowner be given an opportunity to be heard in advance of filing.” The court reasoned that owners, even though subject to a lis pendens, can still sell the property, provided “the landowner can find a willing buyer.”

A lis pendens is not a lien. A lawsuit, for example, must be commenced before a lis pendens may be filed whereas a lien, whether construction, landowners’ associations, or taxing agencies, is recorded before a lawsuit is started, and the holder may thereafter bring an action to foreclose on the lien, but does not have to. Pre-litigation liens areprocedurally tricky and may have contingent deadlines before a suit is allowed to be filed. A construction lien for example, also known as a mechanic’s lien, must be recorded on the title of the property to which a registered contractor is performing improvements within 90 days (residential) or 60 days (commercial) of the date the contractor last performed work on the job. A lawsuit must then be brought to foreclose on the lien within eight months of the date it was recorded.

A lis pendens, on the other hand, is tied to an existing lawsuit and expires when the litigation is over. It does not have to be recorded at the instant the lawsuit commences, but any time up to 60 days thereafter, though early is best for the reasons explained below. Incidentally, after a lawsuit is commenced, say on a construction lien, a lis pendens maythen be recorded on the same property subject to the lawsuit.

The real strength in the lis pendens is defined by statute:

From the time of the filing (of the lis pendens) only shall the pendency of the action be constructive notice to a purchaser or encumbrancer of the property affected thereby, and every person whose conveyance or encumbrance is subsequently executed or subsequently recorded shall be deemed a subsequent purchaser or encumbrancer, and shall be bound by all proceedings taken. RCW 4.28.320.

In assuming priority over purchasers or lienors, the lis pendensfunctions like a pre-litigation lien. When it is recorded, the law treats it as notice to everybody, whether they see the actual recording or not. This is called “Constructive Notice,” where every person is warned their conveyance or encumbrance recorded after the lis pendens is second to it, and subject to the outcome of the lawsuit. In other words, as in the Cranwell case, where the owner of the property could have readily obtained a loan by a lender who would have recorded a deed of trust on the property, the lender hesitates because its encumbrance could be vitiated by the outcome of the lawsuit.

It cannot be stressed enough that grounds for a lis pendens must affect title to the property. For example, recovering a money judgment is notan action on the title. Bramall v. Wales, 29 Wn. App. 390, 395, 628 P.2d 511 (1981). Nor is the enforcement of a restrictive covenant, Foster v. Nehls, 15 Wn. App. 749, 753, 551 P.2d 768, 772 (1976). An action involving a short plat was not enough where the plaintiffs “believed” property would revert to them, and damages were awarded to the plaintiff for the wrongful recording of a lis pendens. Richau v. Rayner, 98 Wn. App. 190, 198, 988 P.2d 1052 (1999). An action on an easement, however, does affect title, and the plaintiff may record a lis pendens. Schwab v. City of Seattle, 64 Wn. App. 742, 826 P.2d 1089 (1992).

To be procedurally sufficient, lis pendens must contain the names of the plaintiff and defendant, a description of the causes of action, and identification of the real property affected by the litigation. A form for a lis pendens looks like this (thanks to 1A WAPRAC § 53.35 Notice of LisPendens):

[CAPTION ] NOTICE OF LIS PENDENS

NOTICE IS HEREBY GIVEN that an action has been commenced in the above-entitled Court upon the complaint of plaintiffs above-named against the above-named defendants. The object of that action is to foreclose a lien claimed by plaintiffs, which lien claim was filed in the office of the Auditor for _____ County, Washington, on_____, 20__, by plaintiff and against defendant.

This action and the lien above described affects title to the following described real property situated in _____ County, Washington, to wit:

[Legal Description]

All persons dealing with the above-described real property situated in ______ County, Washington, subsequent to the filing of this notice, will take subject to the rights of plaintiffs as established in that action.

DATED this______day of______, 20__.

_________________________

Attorney for Plaintiff