We see this happen a lot. Seller wants to sell home. Buyer is interested in purchasing home. Seller no longer wants to sell home to buyer… So what can be done when a seller no longer wants to sell a property to the buyer? Here is why a lis pendens is important in specific performance claims.
Specific performance is a remedy whereby the buyer or, on rare occasions, the seller can sue the other party to the contract to force them to comply with the contract’s terms. Typically, we see specific performance cases where the seller backs out of escrow even though they have no excuse for doing so. In those situations, we often bring specific performance claims to enforce the terms of the contract and to force the seller to sell the property to the buyer.
In California, most buyers use the California Association of Realtor’s (“CAR”) purchase and sale agreement form. That agreement requires the parties to mediate any dispute before going to court or arbitration to enforce or attempt to negate the terms of the purchase and sale agreement. The CAR contract requires mediation as a pre-requisite for either party later claiming their attorney fees as an item of costs in the event they prevail in the dispute.
But, what happens if the buyer fears that the seller is going to transfer the property to someone else, or sell it to someone else? In those instances, it is important for the buyer to record a lis pendens (notice of pendency of action) against the property so that the world is put on notice of buyer’s claim to the property. The CAR form actually has an exception to the mediation requirement that allows a party to file a lawsuit for the purpose of recording a lis pendens.
Why a Lis Pendens is Important:
Recording a lis pendens in a specific performance case is an important step because in certain circumstances when the seller conveys title to a third party before the sale to the buyer is complete, the buyer will have the right to pursue the remedy of specific performance against the third party transferee. Civil Code 3395. That right, however, depends on the transferee not being a bona fide purchaser, having paid value for the property without notice of the prior sales contract. One key way to impart notice is to record a lis pendens.
Civil Code 3395 provides:
Whenever an obligation in respect to real property would be specifically enforced against a particular person, it may be in like manner enforced against any other person claiming under him by a title created subsequently to the obligation, except a purchaser or encumbrancer in good faith and for value, and except, also, that any such person may exonerate himself by conveying all his estate to the person entitled to enforce the obligation.
At Schorr Law, our real estate attorneys have extensive experience litigating specific performance cases. We have successfully represented both buyers and sellers in these actions. To see if you qualify for a free consultation on your specific performance case please contact us today. You can call us at (310) 954-1877, send us an email to firstname.lastname@example.org, or text us to (323) 487-7533.
By: Zachary Schorr, esq.