Despite Lis Pendens, Subsequent Purchaser with Notice Prevails!

This is relevant to bankruptcy practitioners because before we can do anything, we need to know who owns what!

Short version: In California, a notice of lis pendens gives constructive notice that an action has been filed affecting title or right to possession of the real property described in the notice. Any taker of a subsequently created interest in that property takes his interest subject to the outcome of that litigation.

In 1981, the Legislature amended section 409 so as to provide for the first time that the lis pendens must be [1] mailed to “to all known addresses of the adverse parties AND [2] to all owners of record as shown by the latest county assessment roll,”

In this case, the owner’s lawyer’s address was listed on the county assessor’s roll. When contacted, the lawyer said he would refuse the lis pendens and that he did not know where the owners resided. The Court held that despite the lawyer’s statement, the lis pendens should have been mailed to the lawyer because this is a strict requirement of section 409.

Long version: As of March 8, 2001, the owner of record of the property in question was a decedent’s estate in probate. About two years later, title of this property was transferred to parties Ortiz and Colon (presumably as tenants in common). Colon then sold her half to a third party “Lopez.” Lopez did not record the grant deed.

A few years went by and Squatter filed a lawsuit against Ortiz and Colon. In connection with the lawsuit, he recorded a Lis Pendens. The Lis Pendens was not mailed to anyone but instead, Carr’s attorney attached a declaration which stated that Ortiz and Colon had no known address. The problem with this is that on the latest country roll, Ortiz and Colon were listed as the owners of the property with an address of attorney Gaitan. Squatter’s attorney contacted Gaitan and Gaitan said he would not accept service at his address and that he did not know the location of either Ortiz or Colon.

After the lawsuit was filed, Lopez sold his share of the property to a company.

The critical fact here is that the squatter’s attorney contacted Gaitan and, based on his representation that the owner’s address was not known, filed a declaration to that effect. As far as the statute is concerned, the owner’s address is whatever is listed on the assessor’s roll. Consequently, not mailing the lis pendens to the address listed was fatal!

Author’s comments: At first blush this seems very unfair. However, the Plaintiff might be in the business of moving into dead people’s houses, adversely possessing the property and filing a quiet title action once the probate process is finished with. That should be a crime! I get this sense because the facts in the case start out with, “Carr claims to have been in adverse possession of lot 122 since March 8, 2001. As of March 8, 2001, the owner of record of lot 122 was a decedent’s estate in probate.” It is not clear from the opinion but it seems like the squatter moved in THE DAY title changed to the probate estate.

You can find the full case here.

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