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LIS PENDENS & INTERVENTION

Just as versatile and all-encompassing is the Loan Lawyers strategy in the courtrooms, so too are our clients themselves. While some clients are the traditional borrower, many times our clients are in fact investors and companies looking to retain an investment in their portfolio. The question is, considering the newer cases in Florida suggesting when a non-borrowers intervention in a case is appropriate versus when it is not, what happens when a lis pendens is mistakenly discharged?

A lis pendens is the constructive notice of those claims asserted against the property in the pending litigation with respect to one acquiring an interest in the property after the lis pendens is filed.” (Emphasis added). De Sousa, at 931 (Fla. 4th DCA 2015)(quotingU.S. Bank Nat'l Ass'n v. Bevans, 138 So.3d 1185, 1188–89 (Fla. 3d DCA 2014).

In Florida, notices of lis pendens are governed by section 48.23, Florida Statutes (2010), which states in pertinent part:

(1)(a) An action in any of the state or federal courts in this state operates as a lis pendens on any real or personal property involved therein or to be affected thereby only if a notice of lis pendens is recorded in the official records of the county where the property is located and such notice has not expired pursuant to subsection (2) or been withdrawn or discharged.

...

(2) A notice of lis pendens is not effectual for any purpose beyond 1 year from the commencement of the action and will expire at that time, unless the relief sought is disclosed by the pending pleading to be founded on a duly recorded instrument or on a lien claimed under part I of chapter 713 against the property involved, except when the court extends the time of expiration on reasonable notice and for good cause. The court may impose such terms for the extension of time as justice requires.

§ 48.23, Fla. Stat. (2010) (Emphasis added).

“Notices of lis pendens are recorded for two purposes: to protect future purchasers or encumbrancers of the property from becoming ‘embroiled’ in the dispute and to protect the plaintiff from intervening liens that could impair any property rights claimed and also from possible extinguishment of the plaintiff's unrecorded equitable lien.” Fischer v. Fischer, 873 So.2d 534, 536 (Fla. 4th DCA 2004) (quoting Chiusolo v. Kennedy, 614 So.2d 491, 492 (Fla.1993)). Moreover, just because a lis pendens is recorded does not mean the bona fide purchasers are forestalled in the ability to speak in a case. It is well understood that intervention should be liberally granted. Miracle House Corp. v. Haige, 96 So.2d 417 (Fla.1957). Failure to do so is grounds for reversible error. Id. However, one who purchases property subject to a lis pendens “is bound by the judgment or decree rendered against the party from whom they purchased it, as much so as though they had been a party to the judgment or decree themselves.” U.S. Bank Nat. Ass'n v. Quadomain Condominum Ass'n, Inc., 103 So. 3d 977, 978-79 (Fla. 4th DCA 2012) (quoting Greenwald v. Graham, 100 Fla. 818, 130 So. 608, 611 (1930). Even where intervention may not be allowed after final judgment, there is a clear, but narrow exception to the rule prohibiting post-judgment intervention, namely when the interests of justice so require. Sedra Family Ltd. P'ship v. 4750, LLC, 124 So.3d 935, 936 (Fla. 4th DCA 2012) (quoting Wags Transp. Sys., Inc. v. City of Miami Beach, 88 So.2d 751, 752 (Fla.1956)).

For example: LLC Investments acquires a Certificate of Title from a Home Owner’s Association (“HOA”) Sale for a property. The Certificate of Title is recorded December 13, 2013, following the purchase of the property. The Plaintiff in the Bank Foreclosure subsequently dismisses the Bank Foreclosure case, for whatever the reason, and discharges the Lis Pendens on December 2, 2014. The Bank goes a step further and records the order dismissing their case on December 3, 2014. After all is said and done though, the Bank then elects to try to vacate the order dismissing their case and also tries reinstating their lis pendens as previously filed, while also claiming LLC Investments has no standing to challenge anything or even intervene whatsoever.

It is important to note that the Supreme Court of Florida has held, records made under the recording statute “may operate as estoppel where persons without knowledge reasonably take substantial steps relying upon [that] record” Van Eepoel Real Estate Co. v. Sarasota Milk Co., 100 Fla. 438, 129 So. 892 (Fla. 1930) (quoting Comp. Gen. Laws 1927, § 5698). Moreover, the Statute is clear. Florida Statute§48.23 (1)(a) states: “An action in any of the state or federal courts in this state operates as a lis pendens on any real or personal property involved therein or to be affected thereby only if a notice of lis pendens is recorded in the official records of the county where the property is located and such notice has not expired pursuant to subsection (2) or been withdrawn or discharged.(Emphasis added). Therefore, although the Bank may allege they made a mistake by dismissing the case and discharging their lis pendens, they must reap what they sow and now the bona fide purchaser is no longer taking subject to a prior constructive notice of the Bank’s claims asserted against the company’s property.

Categories: Wrongful Foreclosure
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