DENIAL OF MOTION TO DISSOLVE LIS PENDENS DOES NOT AUTOMATICALLY CREATE BASIS FOR CERTIORARI RELIEF

Posted on October 29, 2023October 29, 2023 by David Adelstein

A recent appellate decision out of Florida’s Sixth District Court of Appeal holds that a trial court’s denial of motion to dissolve a lis pendens does NOT automatically give a basis for a petition for a writ of certiorari. Generalized allegations of “irreparable harm” to support the basis for the petition for writ of certiorari are insufficient. Rather, the party moving for the petition MUST clearly demonstrate the irreparable harm; otherwise, the petition for writ of certiorari will fail.

A lis pendens has legal significance. It is a recorded document that notifies the world that there is a pending lawsuit dealing with the real property at issue. This is important because who wants to buy a piece of property that is subject to litigation – that would be a risky transaction!

In CPPB, LLC v. Taurus Apopka City Center, LLC, 48 Fla.L.Weekly D1837a (Fla. 6^th DCA 2023), a dispute arose as to a real estate transaction. The owner sold a parcel to a buyer. The owner also owned three adjacent parcels. As part of the transaction, the buyer agreed to perform certain improvements to all of the parcels including those adjacent parcels owned by the owner. The owner deposited funds in escrow for purposes of its share of the improvements. A payment dispute arose regarding the improvements and the buyer sued the seller. The seller filed a counterclaim to rescind the transaction along with a recorded lis pendens on the parcel purchased by the buyer. The buyer moved to dissolve the lis pendens which the trial court denied. This prompted the appeal – a petition for a write of certiorari based on the trial court’s denial of the motion to dissolve the lis pendens.

The Sixth District explained that a petition for a writ of certiorari is an extraordinary remedy which may ONLY be granted on when the following are established:

“(1) a departure from the essential requirements of the law, (2) resulting in material injury for the remainder of the case (3) that cannot be corrected on postjudgment appeal.” “A finding that the petitioning party has ‘suffered an irreparable harm that cannot be remedied on direct appeal’ is a ‘condition precedent to invoking a district court’s certiorari jurisdiction.’ ” As such, appellate courts should analyze irreparable harm first to determine if jurisdiction exists before deciding whether the trial court’s order departed from the essential requirements of law.

CPPB, supra (internal citations omitted).

Here, the Sixth District declined to adopt a rule that a petition for certiorari relief was always available when a trial court declined to dissolve a lis pendens. Instead, the Sixth District held:

[W]e find that irreparable harm is not presumed in cases involving orders denying motions to dissolve lis pendens because this would create a new category of non-final orders reviewable on interlocutory appeal, which the Florida Supreme Court has expressly declined to do. Accordingly, it was incumbent upon [the seller] to explain how it would suffer irreparable harm absent immediate review of the order denying its motion to dissolve the lis pendens. Having failed to do so, we dismiss its petition.

CPPB, supra (internal citations omitted).

This ruling is clearly not what a party dealing with the denial of a lis pendens want to hear. Or deal with. However, the takeaway here is that if moving to dissolve a lis pendens, make sure to establish irreparable harm to support the certiorari relief.

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.

QUICK NOTE: DETERMINING “FAIR NEXUS” TO SUPPORT LIS PENDENS

Posted on December 12, 2021December 12, 2021 by Edward Garber

When a lis pendens is recorded and the underlying action is NOT based on a duly recorded instrument and is NOT a construction lien action, an evidentiary hearing should generally be held to determine: (a) whether there is a fair nexus to support the basis of the lis pendens, and if so, (b) the amount of the lis pendens bond. Check out this posting to determine more on the meaning of “fair nexus” to support the basis of a lis pendens in this context.

Without supporting a fair nexus between the underlying lawsuit and property subject to the lis pendens, the lis pendens will be dissolved / discharged. It is important to note, however, that even if a fair nexus is supported, the party maintaining the lis pendens will, and should, be required to post a lis pendens bond as determined by the trial court. If the lis pendens bond is not posted within a reasonable period of time set by the trial court, the lis pendens should be dissolved / discharged.

LIS PENDENS – RECORDATION AND DISSOLUTION

Posted on July 24, 2016July 24, 2016 by Edward Garber

When you file a construction lien foreclosure lawsuit, you must also record a lis pendens in the official (public) records against the property. This lis pendens serves as written notice that there is a lawsuit concerning the real property, and more specifically, title relating to that real property. If the property is then sold or rented, the buyer or tenant will ultimately be bound by a final determination relating to the lawsuit concerning title to the property. This is the value in recording a lis pendens and why it is a MUST in any foreclosure lawsuit. (This is the same value in any mortgage foreclosure lawsuit and why lis pendens are recorded in these lawsuits too.) A lis pendens will show up in a title report. In most instances, title companies will not issue a title policy if there is a lis pendens or may require a certain amount of money escrowed as a result of the lis pendens and pending action in order to issue a title policy. Also, a buyer, in particular, and a tenant are not going to want to invest in property where the title to that property is at-issue in a lawsuit. Hence, the lis pendens impacts the sale and potential re-financing of the property.

With respect to the dissolution of a lis pendens, Florida Statute s. 48.23(3) provides:

When the pending pleading does not show that the action is founded on a duly recorded instrument [e.g., mortgage or Declaration of Condominium] or on a [construction] lien claimed under part I of chapter 713 or when the action no longer affects the subject property, the court shall control and discharge the recorded notice of lis pendens as the court would grant and dissolve injunctions.

Therefore, if the lawsuit (i) does not affect title to the real property, (ii) is not based on a construction lien, or (iii) is not based on a duly recorded instrument, such as a mortgage, an owner of real property is going to move to dissolve the lis pendens so that title to their property is not impacted by the lis pendens. This is, at least, what an owner should do.

What happens if a lis pendens is recorded but the lawsuit is not a construction lien foreclosure lawsuit or founded on a duly recorded instrument such as a mortgage?

For example, what if there is a lawsuit for the specific performance of a purchase-sale contract involving real property? In this instance, the party suing for the specific performance of the real property to be sold to it will want to record a lis pendens to put the public on notice that there is an action concerning title to that property. But, this type of lawsuit is not founded on a duly recorded instrument or construction lien. For this reason, the owner of the property will move to dissolve the lis pendens so that they can sell the property or re-finance the property, as the case may be.

A recent decision in Regents Park Investments, LLC v. Bankers Lending Services, Inc., 41 Fla.L.Weekly D1688c (Fla. 3d DCA 2016), exemplifies the scenario of a lis pendens being recorded in a dispute concerning the sale of real property and the owner of the property moving to dissolve the lis pendens. The buyer filed a lawsuit for specific performance to force the owner to sell the property to it. The buyer also recorded a lis pendens (as the buyer did not want the owner to sell the property to another buyer). The owner moved to dissolve the lis pendens so that it could do what it wanted with the property without the impact of the lis pendens.

The Third District explained that the burden was on the proponent of the lis pendens—the buyer that sued for specific performance that recorded the lis pendens—to establish a fair nexus between the claim asserted in the lawsuit and the real property’s title. Regents Park Investments, quoting Nu-Vision, LLC v. Corporate Convenience, Inc., 965 So.2d 232, 234-36 (Fla. 5^th DCA 2007). This fair nexus means the proponent of the lis pendens must make a minimal evidentiary showing they have a good faith, viable claim in the lawsuit concerning the property’s title. Id.

The appellate court, based on this minimal evidentiary showing of a fair nexus between the asserted claim and title the property, maintained:

Applying the standard of a minimal showing that there is at least some basis for the underlying claim and a good faith basis to allege facts that would at least state a viable claim, we conclude that Regents [buyer suing for specific performance that recorded lis pendens] met that standard. Regents’ showing that its claims arose out of a written contract for sale of the subject properties established a “fair nexus” to the properties and its Interrogatory answers swearing that it was ready, willing and able to close on the closing date, together with evidence that Bankers [owner] was not able to close because of the outstanding lot clearing liens against the property, provided a sufficient minimal basis to support either a claim that Regents could have performed or that its performance was excused. Consequently, we find that the trial court should not have discharged the lis pendens and reverse with instructions that it be reinstated.

This fair nexus standard requiring a minimal evidentiary showing provides an advantage to a buyer that sued for specific performance and recorded the lis pendens. It simply requires the buyer to proffer some evidence to support that they have a good faith, viable claim concerning title to the property. If the buyer cannot do this, the lis pendens should be dissolved. On the other hand, if a buyer supports this fair nexus standard, then the lis pendens will not be dissolved meaning the owner’s real property will continue to be impacted by the lis pendens. In such scenario, the owner may ask the court to require that the proponent of the lis pendens furnish a bond in the event it turns out that the buyer’s claim is not valid meaning the lis pendens was wrongfully recorded.