Lis Pendens in Texas: What It Does and How to Remove One

What a lis pendens actually does

A notice of lis pendens is a short document filed with the county clerk that says a lawsuit is pending and that the lawsuit involves the property described in the notice. It is recorded in the lis pendens records and indexed under the names of the parties, so a title search on the property or on the owner turns it up.

The notice does not transfer anything and does not itself create a lien. Its power comes from notice. Anyone who buys or lends against the property after the notice is recorded takes subject to whatever the court later decides in the lawsuit. Because no buyer, lender or title company will accept that risk, a recorded lis pendens usually freezes the property until the notice is removed or the case ends. That is why owners experience it as a lien even though, legally, it is not one.

Who may file one, and for what kind of case

Property Code § 12.007 allows a party who is seeking affirmative relief to file a lis pendens during the pendency of an action involving title to real property, the establishment of an interest in real property, or the enforcement of an encumbrance against real property. It may also be filed after the plaintiff's statement is filed in an eminent domain proceeding.

Three limits follow from that wording. First, the filer must be a party asking the court for relief, not a bystander. Second, the lawsuit itself must be about the property: a suit for specific performance of a purchase contract qualifies, as does a suit to foreclose a lien, a partition suit or a suit claiming a deed is void. Third, a suit that only seeks money, even money connected to the property, does not qualify. A contractor suing for an unpaid bill, a lender suing on a note without seeking foreclosure, or a former partner suing for damages over a real estate deal has no basis for a lis pendens, and a notice filed in such a case is subject to expunction.

The notice must be signed by the party, its agent or its attorney and must state the style and number of the proceeding, the court, the names of the parties, the kind of proceeding and a description of the property. Under § 12.007(d) the person who files it must serve a copy on each party to the action who has an interest in the property no later than the third day after filing. That three-day service rule is a frequent ground for expunction.

How to remove a lis pendens: the expunction motion

Property Code § 12.0071 is the tool. A party to the underlying lawsuit files a motion to expunge, with evidence such as declarations attached. The motion must be served on each affected party at least 20 days before the hearing. The court decides on the affidavits and counteraffidavits on file and any other proof it allows, and may permit oral testimony and order discovery it considers just.

The court must order the notice expunged if it finds any one of three things:

1. The pleading on which the notice is based does not contain a real property claim.
2. The claimant fails to establish by a preponderance of the evidence the probable validity of the real property claim.
3. The person who filed the notice did not serve a copy on each party entitled to one under § 12.007(d).

The second ground is where most contested hearings are fought. The claimant does not have to win the case at the hearing, but it must show that its real property claim is probably valid. That means producing the contract, the deed, the lien documents or whatever the claim rests on, and showing that the facts support it. An owner who can show that the contract expired, that the claimant never tendered performance, or that the claimed interest was released has a strong motion.

Once a certified copy of the expunction order is recorded, § 12.0071(f) provides that the notice no longer gives constructive or actual notice of anything in it or in the lawsuit, does not create a duty of inquiry, and does not affect the validity of a conveyance to a purchaser for value or a mortgage to a lender for value, whether or not they knew about the suit. The property can then be sold or financed free of the claim, even while the lawsuit continues. The court may also require the prevailing party at the hearing to post an undertaking in an amount it sets.

The other route: cancellation on deposit or bond

Property Code § 12.008 gives a court a second way to clear the record without deciding the merits. On motion and after notice, the court may cancel a lis pendens at any time during the case if the party seeking affirmative relief can be adequately protected by a deposit of money into court or by an undertaking. If the court conditions cancellation on a deposit, the amount is the judgment sought plus the interest likely to accrue plus costs. If it conditions cancellation on an undertaking, the undertaking must equal twice the amount of the judgment sought, with two sufficient sureties approved by the court, and the claimant's attorney must receive a copy at least two days before it is submitted for approval.

Cancellation suits a claimant whose claim is really about money secured by the property. It rarely helps where the claimant wants the property itself, because a buyer seeking specific performance cannot be made whole by cash.

Example

Suppose a Plano investor contracts to buy a retail strip center, the seller receives a higher offer and refuses to close, and the investor sues for specific performance and records a lis pendens the same day but mails the copy to the seller nine days later. The seller moves to expunge on two grounds: the notice was served late, and the claim is not probably valid because the investor let the financing contingency deadline pass without a waiver. At the hearing the investor produces the signed contract, the earnest money receipt and an email extending the deadline. The court finds a probably valid real property claim but expunges the notice anyway because of the late service under § 12.007(d). The investor may re-file the notice and serve it properly, and the seller may seek cancellation under § 12.008 by posting an undertaking, but the court is unlikely to grant that where the buyer wants the property rather than money. The dispute over the closing itself is the subject of what a buyer can do when the seller backs out of a commercial deal.

Liability for a wrongful lis pendens

A party who records a lis pendens with no real property claim behind it faces more than expunction. The owner who loses a sale or pays a higher interest rate because of the notice may sue for slander of title, a common law claim that requires proof of a false and malicious statement about the owner's title and a specific lost sale or similar loss. Civil Practice and Remedies Code § 12.002 adds a statutory claim where a person makes, presents or uses a document knowing it is a fraudulent lien or claim against real property, intending it to have legal effect and intending to cause financial injury. Liability under that section is the greater of $10,000 or actual damages, plus court costs, reasonable attorney's fees and exemplary damages as the court determines. Whether a particular lis pendens meets the knowledge and intent elements of § 12.002 is a fact question, and a claimant with a genuine, even if ultimately losing, property claim is in a very different position from one who files to pressure a settlement.

On the other side, a claimant who files a proper lis pendens in a qualifying case is doing what the statute allows. Texas courts have long treated the notice itself, when filed in connection with a pending judicial proceeding, as part of that proceeding, which matters for defamation-type claims.

Mistakes that decide these motions

• Filing in a money case. A suit for damages, even damages from a failed real estate transaction, is not an action involving title to, an interest in or an encumbrance against the property.
• Missing the three-day service deadline. Service under § 12.007(d) is a separate ground for expunction regardless of how strong the claim is.
• Showing up to the expunction hearing with pleadings only. The claimant must prove probable validity with evidence; a verified petition rarely does it alone.
• Forgetting to record the order. The protections of § 12.0071(f) attach when a certified copy of the expunction order is recorded, not when the judge signs it.
• Leaving an old notice in place. A lis pendens from a case that settled or was dismissed still shows up in title searches and becomes a cloud, which is addressed in quiet title actions in Texas.

When to involve a litigator

Before filing one, because an unsupported lis pendens invites an expunction order, a fee-shifting fight and a damages claim. And the day one is found on your property, because the 20-day notice period for the expunction hearing means the clock to a clear title starts only when the motion is served. A litigator can also judge whether the underlying suit can be resolved faster than the notice can be removed. Tina Wysk represents owners, buyers and lenders in title and transaction disputes in Dallas-area courts through the firm's real estate litigation practice.