How current events impact business & real estate

Wednesday, March 10, 2010

Notice of Pendency

A Notice of Pendency (Lis Pendens) can be had by merely filing a form with the county clerk of the county where the real estate identified in the notice exists. Nonetheless, a Lis Pendens is often discussed by real estate professionals as having the effect of labeling someone as a black sheep. We need to change this perception because a Defendant has little control of the fact of its existence. The key is that a Notice of Pendency does not require someone to go to Court prior to its existence. Consequently, there is no pre-filing judicial review and no requirement that the Plaintiff shows that his case has merit. Therefore, the fact that a Lis Pendens is filed means as little as nothing as far as an assessment of fault in a case.

Post-filing, the Defendant can move to have the notice cancelled under CPLR 6501.

Rule: Post-filing judicial review requires a showing that the judgment sought by the Plaintiff would "affect" the real estate in the Notice of Pendency. Yet, this review is limited to the pleadings (Complaint and Answer) of each party and does not address the underlying transaction. The key is that a direct relationship exists between the action and the Defendant's real estate.

Actions where a Notice of Pendency is always available:
1. Mortgage foreclosure action;
2. Partition action;
3. Specific performance action concerning a real estate transaction contract;
4. An action about title to property; and
5. An action to enforce easement rights.

Most people these days just associate a Notice of Pendency with a foreclosure action, but as you can see there are many other topics where it is applicable.

So, lets stop the belief that a Lis Pendens means someone is a deadbeat. There simply is no causation for this belief.

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