Chapter 25 - § 25.4 • NOTICE OF PENDENCY OF ACTION (NOTICE OF LIS PENDENS)

• Jurisdiction: Colorado

§ 25.4 • NOTICE OF PENDENCY OF ACTION (NOTICE OF LIS PENDENS)

§ 25.4.1—Doctrine of Lis Pendens

In General

In the absence of statute or court rule, under the doctrine of lis pendens a purchaser of real property which is the subject of pending litigation takes title subject to any adverse interests ultimately adjudicated in such litigation.³²¹ The common-law rule did not, apparently, apply in the case of personal property.³²²

The doctrine of lis pendens is founded on the policy that decrees or judgments affecting rights in real property should not be undermined by a transfer during the course of the litigation of interests in the subject property to persons not bound by the outcome of the suit.³²³

Actual Notice of Litigation

A notice of lis pendens serves no purpose as between the parties to an action.³²⁴ A purchaser of real property with actual notice of the proceedings involving title is as conclusively bound by the result of the litigation as if he or she had from the outset been a party thereto,³²⁵ and no filing of a notice of lis pendens is required.³²⁶

Notices Regarding Actions in State Courts in Colorado

Colorado has provided, both by statute and by court rule, for the filing of notices of lis pendens. Neither the statute³²⁷ nor the rule³²⁸ creates the law of lis pendens but rather imposes limitations on the common-law doctrine of lis pendens.

The statute, C.R.S. § 38-35-110(1), provides:

After filing any pleading in an action in any court of record of this state or in any district court of the United States within this state wherein relief is claimed affecting the title to real property, any party to such action may record in the office of the county clerk and recorder in the county or counties in which the real property or any portion thereof is situated a notice of lis pendens containing the name of the court where such action is pending, the names of the parties to such action at the time of such recording, and a legal description of the real property. The failure to name a party or describe a portion of the real property in such notice shall not affect the sufficiency of such notice, or the sufficiency of an extension of such notice pursuant to the provisions of subsection (4) of this section, as to the interest of the parties named in such notice or in such extension in the real property described therein. From the time of recording, such notice shall be notice to any person thereafter acquiring, by, through, or under any party named in such notice, an interest in the real property described in the notice in the county or counties where recorded that the interest so acquired may be affected by the action described in the notice.

Under the statute, a notice of lis pendens is not notice to a person who acquires an interest in the property from someone other than a party to the action who is named in the notice of lis pendens.³²⁹ The recording of the notice of lis pendens in the office of the clerk and recorder provides notice and triggers the operation of the doctrine.³³⁰ The notice of lis pendens is effective when filed.³³¹

The rule, C.R.C.P. 105(f)(1), which formerly specified the procedure for recording a notice of lis pendens, now merely provides:

(1) Filing and Notice. A notice of lis pendens may be recorded as provided by statute.

Except in the case of an action to enforce a mechanic's lien,³³² the recording of a notice of lis pendens is not mandatory.³³³

The filing of an amended complaint relates back to the date of filing the motion for leave to file the amended complaint, thus validating a notice of lis pendens filed after the filing of the motion.³³⁴ It does not relate back to the filing of the original complaint so as to validate a notice of lis pendens filed before the filing of the motion.³³⁵

The relationship between the common-law doctrine of lis pendens and statutes or court rules with respect to notice of lis pendens is explained in Empire Land and Canal Co. v. Engley³³⁶ as follows:

The distinction between the term lis pendens and the phrase notice of lis pendens is not always observed. The former is a common-law term, the latter is regulated by statute. At common law, the general rule is that all persons are bound to take notice at their peril of suits affecting the title to property; and purchasers pendente lite, either with or without notice, take no better title than their grantor shall be adjudged to have. The hardship of this rule in cases of certain equitable liens and secret trust estates has led to the adoption of statutes providing for the registry or recording of notice of the pendency of certain actions.

The purpose and effect of filing a notice of lis pendens is to give notice to all who may acquire an interest in the property during the pendency of the litigation that they will be bound by its outcome,³³⁷ and one who acquires an interest in property which is subject to a claim in litigation takes the interest purchased subject to the claim as finally determined.³³⁸ This ensures that judgments affecting rights in real property are not undermined by transfers during the course of litigation.³³⁹ If no lis pendens is recorded, then a purchaser otherwise without notice takes free of the results of the litigation.³⁴⁰ A notice of lis pendens as to a certain undivided one-half interest in the property is not notice to a purchaser of the other undivided one-half interest.³⁴¹ In some circumstances, a recorded notice of lis pendens may serve the purpose of an injunction.³⁴²

In an action where several mechanic's liens are claimed against the same property, only one lis pendens need be filed in order to serve notice of the pending litigation to subsequent purchasers,³⁴³ but where separate actions are filed, a notice of lis pendens relating to one action does not provide notice with regard to other actions.³⁴⁴ It should be noted, however, that a purchaser or encumbrancer of property upon which a mechanic's lien has been filed is charged with notice of the lien regardless of the recording of the notice of lis pendens.³⁴⁵ (Prior to the 1915 amendment of the mechanic's lien statute,³⁴⁶ no notice of lis pendens need have been filed in mechanic's lien cases.³⁴⁷ )

A notice of lis pendens in not a transfer of an interest in the property.³⁴⁸ A notice of lis pendens is not a lien.³⁴⁹ Therefore, while a notice of lis pendens is not a lien within the meaning of the spurious lien statute, it may be a spurious document.³⁵⁰ A notice of lis pendens constitutes only a republication of the pleadings.³⁵¹

The 2006 amendment of the foreclosure statute seems to contemplate that at some point in a judicial foreclosure, a notice of lis pendens is filed with the sheriff.³⁵²

Notices Regarding Actions in Federal Courts in Colorado

There is no federal substantive law regarding lis pendens.³⁵³ Indeed, Congress has provided that notice of pending federal court actions concerning real property is to be governed by the state in which the property is located.³⁵⁴ Although C.R.S. § 38-35-110 does not expressly authorize the filing of a notice of lis pendens in a federal action, its plain language includes filing notice of an action in any court. State law governs all procedures regarding the filing of a notice of lis pendens relating to a federal lawsuit, including those procedures pertaining to its release.³⁵⁵

Notices Regarding Actions in Courts Outside Colorado

Prior to the 2002 amendment of C.R.S. § 38-35-110(1), a notice of lis pendens could be filed even though the action affecting Colorado real estate was filed in a court outside of Colorado.³⁵⁶ However, effective March 21, 2002, C.R.S. § 38-35-110(1) provides for the filing of notices of lis pendens only after filing a pleading in an action "in any court of record in this state or in any district court of the United States within this state."

§ 25.4.2—Actions to Which the Doctrine of Lis Pendens Applies

The common-law rule was quite harsh. It bound anyone who acquired an interest in property by the result of pending litigation involving that property even though the interest was acquired without knowledge of the litigation. Because of this harshness, some courts limited the types of litigation within the rule to those claims directly operating on title as distinguished from those dealing with use or possession. Such a limitation is no longer necessary in Colorado because of the rule that a notice of lis pendens describing the parties and the property must be filed in the office of the clerk and recorder in order to give constructive notice of the pending action. The record gives notice to all persons subsequently acquiring any interest in the property. The effect is to condition the operation of lis pendens upon compliance with the filing requirements of the rule.³⁵⁷ It is the notice of lis pendens, not the pleadings, which gives constructive notice.³⁵⁸ (One who acquires an interest in mining property during the pendency of an adverse suit is provided with notice by the notice of the application for patent, regardless of the recording of a notice of lis pendens.³⁵⁹ )

In Dalander v. Howell,³⁶⁰ the court said that a purchaser without notice from a party to litigation affecting the title to real property is not charged with constructive notice of a lis pendens recorded after his or her deed is recorded. Although this statement reflects the facts of Dalander, query as to whether the purchaser is protected if his or her deed is executed, even though not recorded, before the recording of the lis pendens.³⁶¹

The language, "affecting title to real property" is given a broad interpretation in order to promote the policies behind the rule.³⁶² This language is construed to include not only actions which involve disputed questions of actual title, but also actions which involve determinations of rights and liabilities incident to ownership.³⁶³ Thus, the filing of a notice of lis pendens is proper if the claimant shows that the claim asserted relates to a...