Legal Question in Real Estate Law in California

Re: Lis Pendens Ignored in California

If the lis pendens were properly recorded, it will operate as notice to the world of the litigation and the possibility that the outcome of the litigation will affect the rights of subsequent purchasers, encumbrancers (lenders), etc.

So, in effect, the new lender is stuck with the outcome of the litigation. If that outcome awards ownership or other rights to someone other than the person who signed the note and deed of trust and borrowed the money, the lender doesn't have any collateral and has been a fool.

However, all of this assumes the lis pendens was properly recorded. It is insufficient just to "file" the lis pendens in court.

Also, if the outcome of the litigation didn't have a profound effect on ownership or possession rights in the property, e.g. if the plaintiff largely failed to prevail, the lender will have taken a huge gamble but landed on its feet.

You should be posing these questions to your attorney. If you don't get a clear answer, maybe you should suspect there may have been some malpractice here.

Re: Lis Pendens Ignored in California

I perhaps should add that the purpose of a "lis pendens" (Notice of Pendency of Action) is not to halt all transactions involving the affected property; it is only to give notice that there's a lawsuit under way which may discombobulate the rights of the litigants. New loan and selling activity can take place but, of course, prudent buyers and lenders are generally unwilling to accept the very major risk that the person they deal with as would-be seller or borrower may turn out not to have had any right, title or interest in the property at all, and hence the deed or deed of trust they got is absolutely void. Or, on the other hand, depending on how the litigation comes out, the buyer or lender may be just fine - but it's a huge risk that most won't take.

Re: Lis Pendens Ignored in California

I don't understand what happened. Did you record you trust deed? The notice of lis pendens only places the world on notice of a lawsuit which may impact legal title.