Lis Pendens
Lis Pendens: When Should You Record One? What Are The Risks Of Recording One?
Posted by: Kenny Tan
August 03, 2011
You might not have heard about it but you do appreciate that in California there's a statute that allows you to record one to prevent further transfer of a real property if you have some stakes in it.
What is a Lis Pendens? It is a recorded public notice that there's a pending lawsuit involving a particular piece of property. The purpose of a lis pendens is prevent anything about happening to the title or possession of a property while you are litigating your rights to the property. 
Litigation That Affects Title Or Possession
For instance, if you're a buyer suing a seller for wrongfully refusing to sell a property to you, you certainly want to prevent the seller from either transferring the ownership out of his name or borrowing against it while the litigation is pending. Otherwise your litigation objective will be frustrated by changes in the conditions of the property or the transfer of the property to someone else.
Litigation That Involves Fraudulent Conveyance
Or you've been owed some money and you want to make sure you'll have a judgment that you can collect on against the debtor and are concerned that the debtor may have fraudulently transferred his property to a relative who in turn might further transfer to a bona fide purchaser such that by the time you obtain your judgment in a year or two, there's nothing to collect the judgment against.
No Right To Record A Lis Pendens On Other Types of Civil Suits
Generally, those are the only two categories of civil action where a lis pendens can be recorded. Otherwise, lis pendens is not allowed. For instance, if someone owes you $5,000, you sue him in court for breach of contract. Since a breach of contract action does not affect title or possession to property and as long as the property is still under his name, there's been no fraudulent conveyance, you have no right to record a lis pendens (You may seek a writ of attachment in some cases but it is different from a lis pendens.)
What Happens If You Record a Lis Pendens When You have No Right To Do So?
An improperly recorded lis pendens can be removed by the affected party by a motion to expunge. You may be liable for attorney's fees to the other side. In all likelihood in cases like this, the court will impose monetary sanctions. So you've got to resist the temptation to record one if you clearly do not the right to do so.
Even If There's Right To Record One, The Lis Pendens May Still Be Subject To Expungement If Your Case Is Weak
A lis pendens may still be expunged if you lack sufficient evidence to demonstrate to the court that you're likely to prevail on your claims. While the statute makes it mandatory to impose attorney's fees on the loser on a motion to expunge, I frequently see judges reluctant to impose monetary sanctions in this situation.
Since there are risks involved in recording a lis pendens, before you do so, you might want to decide whether it is even worth it to do one even if you think your evidence is strong. For instance, if you're a tenant who has just exercised a right of first refusal to purchase on a lease on a property that you occupy, while in theory the owner can still sell the property to someone else, the likelihood of that happening is small because bona fide purchasers typically would want to be able to access the property and take a look at the inside before they decide to purchase it. So if you've never had anyone come by to look at the property, chances are there's been no buyer for it. So in this situation, it may not be as important to record one.
