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The Utah Lis Pendens: Protected Notice or Wrongful Lien?

On Behalf of | Nov 28, 2012 | Business & Commercial Law |

The wrongful lien statute allows for removal of any encumbrance against property if the lien is wrongful. A lis pendens can be a wrongful lien if it was recorded before litigation commenced involving title to or an interest in real property. A lis pendens effectively bars anyone from refinancing and removing equity in property or selling or transferring the property. Those who receive the property with a lis pendens recorded against it take title subject to whatever claim is ultimately determined by a court of law.

A lis pendens is nothing more than a republication of the pleadings and thus comes within the judicial action privilege.  Consequently, if a lawsuit has actually been filed affecting title to real property, the lis pendens can be filed with impunity.

If the lis pendens is a wrongful lien, the statute provides for an expedited hearing to remove the wrongful lien, as well as for treble damages or $1,000, whichever is greater.

The problem with a proper lis pendens is the statute itself. It used to be that once a lis pendens was filed, it stayed against the property until a judgment was recorded showing how the lawsuit evidenced by the lis pendens was resolved or the lis pendens was voluntarily released. The lis pendens was treated as nothing more than a republication of the pleadings. With the changes in the lis pendens statute, however, a lis pendens can be removed by court order before the lawsuit over title to real property is finally determined.

In the alternative, the Court may condition keeping the lis pendens in place with the posting of a bond.

Citations that are helpful:
Utah Code Ann. § 78B-6-1303, 1304
Utah Code Ann. § 38-9-1 et seq.
Utah Code Ann. § 38-9a-101 et seq.
Utah R. Civ. P. 62(h)
Winters v. Schulman, 1999 UT App 119, 977 P.2d 1218
Eldridge v. Farnsworth, 2007 UT App 243, 166 P.3d 639

Authored by Lewis P. Reece