When a Lis Pendens is Appropriate in Colorado (Part 2 of 2)
by Michael Selinfreund, President / General Counsel for Cherry Creek Title Services, Inc.
This article is intended for educational purposes only and not as legal advice
December 4, 2015
The purpose of a lis pendens is to give constructive notice regarding a potential interest in real property being claimed by another. A common situation where the use of a lis pendens is appropriate is when a lien claimant moves forward with an action to foreclose their lien. If a voluntary mortgage or deed of trust is being judicially foreclosed, then a lis pendens is recorded with the case caption information to give notice of the foreclosure. Remember, a Public Trustee foreclosure of a deed of trust is evidenced by the recording of a Notice of Election and Demand for Sale (NED). See C.R.S. §§ 38-38-101(1)(a) and (4). The lis pendens is the analogous document to the NED in a judicial foreclosure.
If an involuntary lien is being foreclosed such as a mechanics lien or judgment lien, filing/recording the lis pendens shows evidence that action was taken timely and in compliance with the relevant statutes. Mechanics lien claimants must typically commence an action within 6 months of completion of the work. See C.R.S. 38-22-110 for more detailed information on calculating the 6 months. And although judgments may be valid for 20 years, recorded judgment liens affecting real property expire in 6 years absent a revivorship. See Baum v. Baum, 820 P.2d 1122, 1123 (Colo. App. 1991). The revivorship must be commenced prior to the expiration of the six year period and gives the judgment lien another 6 years of life. C.R.S. 13-52-102(1).
Another common use of the lis pendens is during dissolution of marriage proceedings. Since parties to a divorce often have a marital property interest regardless of how property is titled, filing the lis pendens gives notice; ties up the property; and puts the divorcing party in senior recording position regarding any future recorded voluntary or involuntary liens. Divorcing parties that are in title often still record a lis pendens during a dissolution proceeding to establish their position in line ahead of any future liens that may arise pending the dissolution proceedings. There is already a pending action in District Court regarding the dissolution so that’s the case caption appearing on the face of the lis pendens.
Finally, a lis pendens is appropriate in an action to quiet title arising from a number of possible situations such as an action to quiet title to a Treasurers Deed or one to clear up and resolve disputed items of record impacting the property such as an unreleased mortgage or deed of trust when the last holder of the interest is out of business and the trail of any subsequent holders that could handle the release goes cold.
Since the lis pendens is a form of pre-judgment attachment, one must be careful not to abuse its use exposing the recording party to damages for slander of title. Courts frown on the abuse of a lis pendens, and the wrongful use is a bad start to a disputed matter so be careful. Litigants owed money for a variety of reasons often record a lis pendens seeking to effectively secure their claim and also tie up the opposing party’s property as a strong arm tactic. Some go as far as recording them on properties titled in the names of LLC’s and corporations just because the opposing party has an interest in such entities. That is predictably a very slippery slope and exposes the party recording the lis pendens to exposure to claims from the other LLC members and corporate shareholders.