By Jones Osborn II

The Arizona Court of Appeals has issued a clear warning against clouding another person's title to real estate. In a recent decision, the Court awarded treble damages for the wrongful filing of a lis pendens.

Arizona law provides that anyone involved in litigation affecting title to real property may record a notice of that action. This notice is called a "lis pendens," and is designed to give potential purchasers of the property notice that there is litigation in progress which may affect the title to that property.

In a recent case, the parties were in a dispute over the ownership of a 40-acre parcel, which was part of a larger 740-acre parcel 700 acres of which were not in dispute. Never-theless, one of the parties filed a lis pendens against the entire 740 acres, in order to "gain leverage." The result of the lis pendens was that a sale of the larger parcel to a third party was delayed by 28 days, while title was cleared.

The Court held that it was improper to file a lis pendens against the entire 740 acres, because title to only 40 acres was at issue. It therefore awarded damages for the lost interest caused by the seller's delay in receiving the sales price. The lost interest was $46,261.32. Because Arizona has a statute allowing treble damages for the wrongful clouding of another's title, the amount was trebled to $138,783.96. In addition, the prevailing party was awarded his attorney's fees.

Conclusion. A lis pendens can and should be filed when title to property is a legitimate issue in a lawsuit. However, a lis pendens should never be recorded just to harass or "gain leverage" over the other party. The same is true of any other form of lien, claim, or encumbrance which could amount to a wrongful clouding of title. The penalty for doing so is treble damages plus attorney's fees.

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The decision cited above is Patterson v. Bianco, 80 Ariz. Adv. Rep. 38 (Feb. 12, 1991).