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lis pendens

Damages Caused by Wrongful Recording of Lis Pendens (Not Founded on Instrument or Statute)

Posted by David Adelstein on April 16, 2019
Trial Perspectives / Comments Off on Damages Caused by Wrongful Recording of Lis Pendens (Not Founded on Instrument or Statute)

What are the damages caused by the WRONGFUL recording of a lis pendens, and I am referring to a lis pendens NOT founded on a duly recorded instrument (e.g., not founded on a mortgage) or a statute (e.g., not founded on a construction or assessment lien)?  These are damages that should be accounted for in a lis pendens bond

The recent opinion in LB Judgment Holdings, LLC v. Boschetti, 44 Fla.L.Weekly D693a (Fla. 3d DCA 2019), relying on Haisfeld v. ACP Florida Holdings, Inc., 629 So.2s 963 (Fla. 4thDCA 1993), explained:

Haisfield looks back at losses that were actually suffered by a property owner from a lis pendens found to be unjustified, rather than at prospective losses that might be suffered. Its methodology is the best yardstick for evaluating the market value component of damages that may result from a wrongfully-filed lis pendensHaisfield instructs that such damages, if any, are measured by any decline in market value between the time the lis pendens is recorded and the time it is discharged. The proponent of a lis pendens might pay no damages if the market value increased substantially during that time. 

Haisfield also recognizes that the expenses of preservation and maintenance of the property subject to a lis pendens may be awarded for the interval between recordation and discharge if the lis pendens is found to be unjustified and the expenses are a consequence of the unjustified lis pendens.

Now, what about loss of investment return / lost opportunity?  For example, what if the lis pendens impacts a sale where there is a net market value for the property of “X” after taking the fair market value and deducting brokerage commissions, mortgage debt, and past due taxes.  This amount would ultimately represent equity in the property that if the party had could then earn interest—in other words, there is a loss of use of that equity.  See, e.g., LB Judgment Holdings, supra (party posting lis pendens bond proffered expert to produce computation to support what lis pendens bond amount should be; although the court required a higher lis pendens bond amount).  However, this loss of investment return / lost opportunity could be a damages methodology in different situations as it pertains to a real property dispute depending on the circumstances of that dispute.

Also, attorney’s fees should be factored into the lis pendens bond that “foreseeably may be incurred in discharging a lis pendens.”   S and T Builders v. Globe Properties, Inc., 944 So.2d 302 (Fla. 2006); accord LB Judgment Holdings, supra (rejecting argument that attorney’s fees include fees incurred during entire litigation as entire litigation is beyond fees incurred in discharging lis pendens).

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Risk in Purchasing Property Subject to a Pending Foreclosure and Lis Pendens

Posted by David Adelstein on June 09, 2018
Trial Perspectives / Comments Off on Risk in Purchasing Property Subject to a Pending Foreclosure and Lis Pendens

When real property is the subject to a pending foreclosure action where there is a lis pendens (a formal notice), a buyer that purchase the property outside of the foreclosure “does so at his own risk because he is on notice that the property is subject to the foreclosure action [through the lis pendens].Bymel v. Bank of America, N.A., 159 So.3d 345, 346 (Fla. 3d DCA 2015). The buyer is not permitted to intervene in the pending foreclosure action. See id. at 346-47.

In a recent case, The Bank of New York Mellon v. HOA Rescue Fund, LLC, 43 Fla.L.Weekly D1312b (Fla. 2d DCA 2018), the bank (mortgagee) filed a foreclosure action and lis pendens. After the bank’s action was pending, the mortgagor’s homeowner’s association foreclosed an unpaid assessment lien. A buyer obtained the property at the foreclosure sale of the assessment lien and then moved to intervene into the bank’s previously filed foreclosure action, which the trial court allowed. (It appeared the bank, although its action was previously filed, did not aggressively prosecute the foreclosure and was fine with allowing its action to sit idle.)

Two issues were addressed on appeal.

First, the buyer that purchased the property through the homeowner’s association’s foreclosure of an assessment lien should NOT have been allowed to intervene. “A purchaser of property that is the subject of a pending foreclosure action in which a lis pendens has previously been recorded is not entitled to intervene in that foreclosure action.” The Bank of New York Mellon, supra. This language is the reason why filing a lis pendens is powerful! The lis pendens puts the subsequent buyer on notice that he is purchasing the property at his own risk knowing the title to the property is subject to a pending lawsuit.

Second, even if the buyer could intervene, the buyer purchased the property subject to a superior interest. In other words, the mortgage was superior to the homeowner’s association’s assessment lien so when the buyer purchased the property at the foreclosure sale of the assessment lien, the purchase was always subject to the superior mortgage. Even if intervention was proper, the buyer still would not be able to participate in the bank’s foreclosure action as if the buyer were a party to the original note and mortgage.

It is extremely important in situations like this that you get a Foreclosure Lawyer involved to go through the case with you. It is a very complex situation to be in, and I would recommend not doing it alone.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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