A common problem in Arizona is how does someone protect themselves when they have a dispute concerning real property. The last thing you want to have happen is for one of the parties involved in the dispute to sell the real property that is disputed before a lawsuit has finished. For example, if Person A invested money to help purchase real estate owned by Person B, and then Person B tried to sell the property without giving Person A their share of the sales earnings, how does Person A stop Person B from doing this and leaving Person A without recourse as to the property? Similarly, if a family member is living with another family member who makes major improvements to the home and then the other family member sells the home while denying the right of any part of the sale proceeds to that family member, what can he or she do to ensure that he or she is fairly compensated for the improvements made before the property is sold? The answer can be found in Arizona’s lis pendens statute A.R.S. § 12-1191, which allows somebody claiming that a dispute concerning real property exists to file a notice of pending litigation against the landowners at the same time as filing a lawsuit. By doing this, all future purchasers are put on notice of the plaintiff’s claim.
Filing a notice of lis pendens or a “pending lawsuit notice” is vital to avoid property sales during active litigation. Without this protection, defendants could sell the contested property, and plaintiffs would be unable many times to get the requested relief in their lawsuits. When a lis pendens action is filed against a property, potential purchasers are hesitant to buy the property because they would be acquiring the property subject to the plaintiff’s claims.
The right to file a notice of lis pendens against property is found in section 12.1191 of the Arizona Statutes, which provides as follows:
- In an action affecting title to real property, the plaintiff at the time of filing the complaint, or thereafter, and the defendant at the time of filing the defendant’s pleading when affirmative relief is claimed in such pleading, or thereafter, may file in the office of the recorder of the county in which the property is situated a notice of the pendency of the action or defense. In any action to foreclose a mechanics’ or materialmen’s lien pursuant to title 33, chapter 7, article 6, the lien claimant shall file a notice of pendency of action as prescribed by section 33-998 within five days of filing the action or raising the defense. The notice shall contain the names of the parties, the object of the action or affirmative defense, the relief demanded and a description of the property affected.
- The recorder shall file the notice and record and index it in the names of the parties to the action, and thereafter a purchaser or encumbrancer of the property affected shall be held to have constructive notice of the pendency of the action and the claims therein made except as prescribed in subsection D of this section.
Before filing a lis pendens, you need to verify that you have the right to file one and record it against real property. If you do not have the legal right to file a lis pendens and do it anyway, you could be subject to liability under the false lien statute A.R.S. § 33-420. Pursuant to A.R.S. § 33-420(A), “a person purporting to claim an interest in, or a lien or encumbrance against, real property, who causes a document asserting such claim to be recorded in the office of the county recorder, knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is liable to the owner or beneficial title holder of the real property for the sum of not less than five thousand dollars, or for treble the actual damages caused by the recording, whichever is greater, and reasonable attorney fees and costs of the action.”
So, whenever you have a dispute with someone that involves real property, you should consider whether a lis pendens can/should be filed. Call 602-362-2396 to speak with a Phoenix real estate litigation lawyer from The Anthony Law Group. We regularly provide services related to real estate disputes to investors and professionals in Arizona and are always happy to help clients navigate their way through the state and federal court systems.