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When a lawsuit between parties involves real property, such as a real estate transaction or asset sale, sometimes the purchaser will file a lis pendens in the litigation. The term “lis pendens” literally means a pending suit. In Florida it is defined as the jurisdiction, power, or control which courts acquire over property involved in a pending suit. By filing a lis pendens and recording it in the public record, the filing party creates a cloud on the title that effectively prevents the owner from selling his property to a third party until the litigation is resolved. For example, if a seller on a contract to purchase real estate claims the buyer breached the contract, the buyer could then file an action for specific performance to force the sale of the property. Together with the complaint, the buyer would then file and record a lis pendens to prevent the owner from selling the property to anyone else. Even though the seller may be without fault, the buyer can effectively prevent the sale the property for years while the lawsuit runs its course. This could force the property owner to hold onto the property while defending a meritless action during a period of time when numerous buyers are interested in purchasing. Many buyers are aware of this tactic and use it to their advantage to extract concessions from the seller.
Fortunately, Florida law provides relief to a property owner in this situation where he or she is able to demonstrate a potential loss or damage that would likely be incurred if the lis pendens is unjustified. Specifically, Section 48.23(3), Florida Statutes provides that “[w]hen the pending pleading does not show that the action is founded on a duly recorded instrument or on a lien claimed under part I of chapter 713 . . . the court shall control and discharge the recorded notice of lis pendens as the court would grant and dissolve injunctions.” In other words, when a lis pendens is filed based on a contract for sale or a dispute over ownership of the real property, a trial court has discretion to require the person who filed the lis pendens to post a bond to protect the property owner from damages if the lis pendens is ultimately dissolved by the court. This requires the property owner to file a motion to dissolve the lis pendens upon which the court would hold a hearing to determine the likelihood of damages. Additionally, the court would determine the amount of the bond to be posted by the person who filed the lis pendens to protect the owner from damages. If the bond is not posted as ordered by the court, the court will likely discharge the lis pendens, allowing the owner to sell the property to another party. Either way, the property owner is protected from an unjustified lis pendens.
- Christian A. Petersen is a Fort Lauderdale real estate attorney with the Florida law firm of Olive Judd. P.A. Petersen represents Florida businesses, as well as national and international clients, in state court, federal court, and arbitrations throughout Florida and the United States. His practice includes disputes regarding real property.