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In this webinar, Attorney Aaron Dunn from our Real Estate and Litigation Transaction Group will be discussing “Lis Pendens Primer”
Transcript
19 seconds
Good afternoon everybody. My name is Aaron Dunn. I'm an attorney here at Bears Booth uh and I practice in the litigation and realy groups. Today I'm28 seconds
going to be giving you a primer on what's called a liz pendants. Um, a Latin term that uh really just means a35 seconds
document that you can record in a lawsuit that's already ongoing to provide notice to the outside world that the lawsuit is ongoing and the lawsuit44 seconds
affects title to the real property at issue in the litigation. So, let's get into it.52 seconds
Uh thank thank you to those who have stuck with me despite using a Latin phrase and uh I can see people probably rolling their eyes right now. Uh but1 minute, 1 second
hopefully you find this interesting. So uh thanks for sticking with it. Uh again list pendants is a document. It's just a simple document that you can record in1 minute, 9 seconds
the county in which the uh real property issue is situated. uh you record it with the county auditor that uh again is is1 minute, 17 seconds
just a simple document, but it provides notice uh of the lawsuit, the claims in the lawsuit, and it essentially says,1 minute, 24 seconds
"Hey, this lawsuit involves title to real property. So, everybody be advised that to the extent you want to lend, to1 minute, 31 seconds
the extent you look to you're wanting to purchase this property, anything you want to do associated with this property, you're going to have to do it subject to the outcome of this1 minute, 39 seconds
litigation. And as we'll get into here in a minute, it has the practical effect of of basically freezing things in time and preventing anything from being done1 minute, 47 seconds
with the property until the lawsuit is is resolved. Um, so that's kind of the the basics of of a liz pendants. Um, a1 minute, 56 seconds
simple document that has big practical effects and has the potential for misuse and abuse.2 minutes, 3 seconds
So what's the purpose of Liz pendants?2 minutes, 5 seconds
Uh well, not only providing notice to third parties, providing constructive notice to the outside world about the lawsuit, but but preserving the status2 minutes, 14 seconds
quo of the lawsuit uh in terms of title to the real property at issue until the lawsuits resolved, whether that be by2 minutes, 22 seconds
judgment uh or settlement. And then it it has the effect of of protecting somebody's interests in property. Uh the2 minutes, 30 seconds
example that I like to give is somebody believes they've adversely possessed a portion of their neighbor's property and2 minutes, 36 seconds
they say, "I have rights to that portion of my neighbor's property that I believe I've adversely possessed. So I want to2 minutes, 44 seconds
preserve the status quo, notify the world of my rights that I believe I have to that property, and basically let2 minutes, 52 seconds
everybody know that until this lawsuit's decided, don't do anything with that property. or if you do you're whatever you're doing is going to be subject to3 minutes, 1 second
uh the outcome of the litigation. So the list pendance has kind of the dual purpose of preserving the status quo um3 minutes, 8 seconds
uh providing notice and protecting interest but because of the the ability to protect interest in real property and3 minutes, 15 seconds
to tie up real property um it's a valuable tool that can be abused and that's why Washington uh makes sure that3 minutes, 24 seconds
that you only use the list pendants list pendants can only be recorded in certain circumstances.3 minutes, 31 seconds
The practical effect of the LIS pendants, as you've probably gathered from the presentation thus far, is that no sales of the property are going to3 minutes, 39 seconds
occur until the lawsuit's resolved and the LIS pendance is removed. Um, no no title insurance company is going to issue a pol policy of title insurance3 minutes, 48 seconds
until the lawsuit's resolved because because uh title to the to the real property uh is unclear or at least one3 minutes, 55 seconds
person asserts it's unclear. Uh so until that lawsuit's resolved, um nobody's going to sell it. Nobody's going to buy it. Nobody's gonna or a title insurance4 minutes, 3 seconds
company is not going to issue a policy of title insurance. No lender's going to lend on that property. Uh refinancing is going to be extremely difficult if not4 minutes, 11 seconds
impossible. And then, you know, from a litigator's perspective like like myself, um it can provide real leverage4 minutes, 19 seconds
to to settle a lawsuit. If I have a case where u penance has been recorded and4 minutes, 26 seconds
you're you're defending that case and perhaps maybe the client wants to sell uh wants to do something with the4 minutes, 32 seconds
property, maybe the recording of the Liz pendants provides an incentive to settle the lawsuit that otherwise would not have been settled because they want to4 minutes, 40 seconds
get on with life and and sell the property or do whatever they want to do with the property or or refinance, whatever the case may be. um that's real4 minutes, 48 seconds
leverage uh that that that a party can use in a lawsuit. But because it is leverage, it has the potential to be misused and abused. Um so it's really4 minutes, 57 seconds
important to figure out whether the LIS pendance is proper or not because really because only a court or a party voluntarily can remove a list pendance.5 minutes, 8 seconds
Uh but otherwise only the court can remove a list pendance. So it it's really important to understand that5 minutes, 16 seconds
while the Liz pendants is narrow um a party can use it as a litigation tactic5 minutes, 23 seconds
uh whether proper or not as we'll get into to perhaps force another party's hand.5 minutes, 32 seconds
So what is Washington's LIS pending statute? It's found at RCW4.28.320.5 minutes, 38 seconds
It's a long statute, but the the key words that I'm going to focus on are an action affecting title to real property.5 minutes, 46 seconds
The legislature has said at any time after an action affecting title to real property is con been uh commenced, the5 minutes, 54 seconds
plaintiff or the defendant may file with the auditor in each county in which the property is situated a notice of the pendency of the action containing6 minutes, 1 second
certain information about the the parties and the lawsuit in general. and they're so they're saying you can record Liz pendants but only in an action affecting title to real property.6 minutes, 13 seconds
That's helpful but it does not define what is and what is not an action affecting title to real property. So hence we have case law that has6 minutes, 21 seconds
attempted to provide guideposts on what is and what is not uh an action where list pendants can be recorded.6 minutes, 29 seconds
So what is an action when a list pendants is proper? Well, courts have said an action affects title to real property where the action involves6 minutes, 38 seconds
adjudication of rights incident to title to real property. Again, it sounds really good, but what does that mean? Uh what types of cases, what types of6 minutes, 46 seconds
claims actually fit the mold? Well, we have some classic examples on the screen and think of quiet title. Does John own the property or does Jill own the6 minutes, 55 seconds
property? Who has superior title? a lawsuit that that is really just disputing that at its simplest form. Liz pendants would be proper. Adverse7 minutes, 3 seconds
possession suit. Neighbor A believes they've adversely possessed a portion of neighbor B's property uh and neighbor A sues. They can record a LIS pendance. Uh7 minutes, 12 seconds
specific performance in real estate contracts. Uh party agrees to sell the other side the other another party uh property but then says I'm not going to7 minutes, 21 seconds
do so and doesn't have any basis to do so. and uh forcing a lawsuit seeking specific performance. Hey, live up to your end of the bargain and sell me that7 minutes, 29 seconds
property. A list pendance can be recorded against the property at issue.7 minutes, 33 seconds
Uh uh that that that's a proper use of the list pendants. Uh partition actions, uh co-owners of real property, but foreclosure proceedings, leans that are7 minutes, 42 seconds
recorded against property and the lawsuit is filed to uh foreclose on that lean. Those are all examples where yes, Liz pendants would be proper, can7 minutes, 51 seconds
provide leverage, um everything's okay, but so what's not an action affecting the title to real property? This is7 minutes, 59 seconds
important because as we'll discuss here in a second, uh recording list pendants without justification can lead to some8 minutes, 7 seconds
harsh consequences and can subject the party to liability in the form of both damages and attorney's fees. So the the8 minutes, 14 seconds
classic example of where a list pendance is improper is where the plaintiff is only seeking a money judgment. Uh only8 minutes, 22 seconds
seeking monetary damages. That's the only thing I'm seeking. I'm not seeking an interest in that real property. Um but I all all I want from you is a set8 minutes, 30 seconds
sum. I want $50,000, $100,000, a million dollar, whatever that number is. All I'm seeking is damages in form of monetary8 minutes, 37 seconds
compensation. No list pendants can be filed in that circumstance. I'll put an asterisk by this for now because at the end of this presentation, I'm going to8 minutes, 46 seconds
highlight a new case in Washington from the Washington Court of Appeals where the court has um perhaps expanded uh Liz8 minutes, 56 seconds
Pendon rights, Liz Pendon's rights um where a party is seeking a money judgment, but the money judgment can be9 minutes, 3 seconds
executed against real property. So I'll put an asterisk there. But uh as a general rule, a lawsuit where only money9 minutes, 12 seconds
uh only a money judgment is being sought does not support a list pendants. A liz pendants would be wrongful in that situation.9 minutes, 19 seconds
Uh a lawsuit seeking to enforce a restricted covenant. Just because a pro or just because a lawsuit involves real9 minutes, 26 seconds
property does not mean a list pendance is proper. There's a case called Foster V. in Washington where the plaintiffs9 minutes, 34 seconds
said the defendant's structure did not comply with covenants that governed um the properties at issue and and9 minutes, 42 seconds
certainly the defendants's property and the plaintiffs tried to record all these pendants and the court said no can't do that just because this lawsuit involves9 minutes, 50 seconds
real property does not mean it actually affects title to real property. So, an important distinction that uh can get9 minutes, 57 seconds
somebody into hot water if if they don't uh consult with an attorney beforehand.10 minutes, 2 seconds
Um most general business corporate partnership disputes even if they uh involve real property to a certain10 minutes, 10 seconds
extent, real property is tangentially involved, those uh typically uh there's exceptions to every rule, but those typically are not going to support a Liz pendants.10 minutes, 21 seconds
So, what's the big deal anyway? uh what what does it matter if you if you record a list penins without authority to do10 minutes, 27 seconds
so? Well, as I mentioned, you can um you know get yourself into hot water in terms of becoming liable for damages and10 minutes, 35 seconds
attorney's fees. I think this falls into it does fall into two buckets. Number one being a liz pendants is recorded in10 minutes, 42 seconds
a lawsuit that does not affect title to real property. There's no basis for the liz pendants. Nonetheless, one is recorded. The agrieved party, the party10 minutes, 51 seconds
owning the real property against which a list pendance has been recorded, can ask the court to enter an order saying that10 minutes, 58 seconds
list pendance is improper. It is cancelled. Um, and and I'm entitled to my attorney's fees and actual damages11 minutes, 6 seconds
under the statute. In that circumstance, attorney's fees are mandatory. The court can't say, "I don't think they're proper in this circumstance, or at least isn't11 minutes, 14 seconds
supposed to." They're supposed to be mandatory.11 minutes, 17 seconds
So it's really uh uh a warning by the legislature. Do not record a list pendants unless you have authority to do11 minutes, 24 seconds
so. The other example where a party can become liable for recording a list pendants without authority and really11 minutes, 32 seconds
it's substantial justification is after a lawsuit has been settled, discontinued or abated for our purposes here today when the lawsuit's over.11 minutes, 41 seconds
In that in that circumstance where maybe the the the action did affect title to real property at least in name but the11 minutes, 50 seconds
list pendance was not substantially justified. The the claimant the party uh filing the list pendants reporting list11 minutes, 57 seconds
pendants against the real property can be liable uh um for attorney's fees and actual damages. I'd say that's less12 minutes, 5 seconds
common, but that that possibility still exists. More of a deterrent to filing a Liz pendants without proper justification.12 minutes, 16 seconds
So, as I kind of hinted at, teased earlier, there may be an expansion of Liz pendants rights in Washington. What litigators like myself are always12 minutes, 24 seconds
keeping an eye on is recent opinions from appellet courts. And recently, earlier this month, an appellet court uh12 minutes, 32 seconds
in Washington said an unjust enrichment theory that may create an equitable lean against the property against a specific12 minutes, 39 seconds
property supported a liz pendants. This came as a little bit of a surprise to me and I'm sure other practitioners, you12 minutes, 46 seconds
know, who practice in this area because an unjust enrichment theory and it was true in this case really is seeking12 minutes, 53 seconds
monetary damages, a money judgment. But the court in Parmman, the case that I've cited on the screen, decided uh, you know, the decision was handed down in13 minutes, 1 second
mid July of 2026 this year, said, "Well, an unjust enrichment theory may support an equitable lean against property. And13 minutes, 10 seconds
to the extent a defendant fails to satisfy a judgment, the equitable lean can be used to force a sale of the13 minutes, 18 seconds
property. So, the LIS penance was proper." As you can probably tell by my by my explanation, um I have some issues13 minutes, 27 seconds
with that reasoning, but nonetheless, it is the reasoning from an appellant court. And what I'm keeping a close eye on is whether Parmman is going to be13 minutes, 35 seconds
extended or whether it's going to be a narrow holding only applied to the facts of the case. Is the future going to be13 minutes, 42 seconds
any case that has a conceivable nexus to real property where a money judgment could be enforced against real property?13 minutes, 50 seconds
uh is that type of case one where a list penance is proper. Um as an example, if somebody is at um you know an13 minutes, 58 seconds
acquaintance's house and the deck is not up to code and they fall through the deck and sustain uh substantial injuries and file a lawsuit seeking a money14 minutes, 6 seconds
judgment and the court says, well, the defendants probably won't be able to satisfy that money judgment with money.14 minutes, 14 seconds
Uh so the plaintiff can execute against the real property. Does that make a list pinance proper? You know, maybe underpinment, maybe not underp. But it's14 minutes, 22 seconds
just a a thing to keep an eye on because of the the the substantial effects that a list pendants can have and the leverage that it can apply in a lawsuit.14 minutes, 33 seconds
Um, so we're keeping a close eye on on what the next frontier, the new frontier, if any, is going to be with respect to Liz Pendants's rights in14 minutes, 40 seconds
Washington. Uh the lawyers here at Bears Booth have have plenty of experience dealing with real property issues, all types. We've advised uh people who want14 minutes, 49 seconds
to record a LIS penins pins recorded against their property. We'd be happy to address your specific situation with you14 minutes, 56 seconds
and outline what your what the the risks and uh benefits would be. So please do not hesitate to contact me. My my15 minutes, 3 seconds
contact information is on the screen. Uh I'm always available uh by phone or by email. Thanks so much for your time. Uh,15 minutes, 10 seconds
and I appreciate you you sitting through this this this presentation with me.The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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