Lis Pendens
A recorded notice that litigation is pending concerning specific real property, providing constructive notice to subsequent purchasers and lenders of the dispute. Permitted only in eminent domain proceedings and in actions involving title to real property, establishment of an interest in real property, or enforcement of an encumbrance against real property. Subject to expungement on motion if the underlying claim lacks evidentiary support.
A lis pendens (Latin: "litigation pending") is a recorded notice that litigation is pending concerning specific real property. Once recorded with the county clerk, it provides constructive notice to subsequent purchasers, lenders, and other parties dealing with the property. The practical effect is to "cloud" title until the underlying litigation is resolved, buyers and lenders typically refuse to close on property subject to a pending lis pendens, since they would take subject to whatever judgment ultimately issues.
When a lis pendens may be filed
Section 12.007 limits lis pendens filings to eminent domain proceedings and three categories of actions: (1) actions involving title to real property; (2) actions to establish an interest in real property; and (3) actions to enforce an encumbrance against real property. Only a party seeking affirmative relief may file. A lis pendens filed in connection with an action that does not fall within these categories, for example, a pure money-damages contract dispute that incidentally references a property, is improper and subject to expungement.
Required content and recording
The notice must be signed by the filing party or its agent or attorney and must state: (1) the style and number of the proceeding; (2) the court in which it is pending; (3) the names of the parties; (4) the kind of proceeding; and (5) a description of the property affected. It is recorded with the county clerk of each county where part of the property is located. Within three days after filing, the filer must serve a copy on each party to the action who has an interest in the property, and failure to serve is a ground for expunction.
Cancellation and expungement
Section 12.0071, added in 2009, allows a party to the action to move to expunge the notice. The court must order expunction if (a) the pleading on which the notice is based does not contain a real property claim; (b) the claimant fails to establish by a preponderance of the evidence the probable validity of the real property claim; or (c) the filer did not serve the notice as § 12.007(d) requires. Notice of the motion must be served at least 20 days before the hearing. Once a certified copy of the expunction order is recorded, the notice no longer gives constructive or actual notice, and the property may be transferred or encumbered free of the matters asserted in the notice and the action. Separately, § 12.008 permits cancellation if the claimant can be adequately protected by a deposit of money or an undertaking.
Effect on transactions
A pending lis pendens generally precludes commercially financeable real estate transactions, title insurers will not issue policies without exception, and lenders will not fund loans subject to the unknown outcome of litigation. As a practical matter, the lis pendens functions as injunctive relief without the procedural protections of an injunction. This makes the expungement remedy under § 12.0071 critically important when the underlying claim is weak or improperly framed.
Improper filing risks
Texas courts of appeals have treated the filing of a lis pendens as part of the judicial proceeding and absolutely privileged, so that slander-of-title and tortious-interference claims based on the filing fail even where the notice falls outside § 12.007. Prappas v. Meyerland Cmty. Improvement Ass'n, 795 S.W.2d 794 (Tex. App.-Houston [14th Dist.] 1990). The usual remedy for an improper notice is expunction or cancellation, and § 12.0071 does not itself provide for attorney's fees.
A lis pendens found during title review of Texas commercial property usually stalls a closing. The questions that follow are what the underlying action seeks, whether it falls within § 12.007, whether the filer served the notice, and whether expunction under § 12.0071 or cancellation on a deposit or undertaking under § 12.008 is available. Parties sometimes close around a notice with an escrow, an indemnity or a postponement. Only a party to the action may move to expunge.