Monday, February 26, 2007
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Lien Must Be Indexed, Not Just Recorded, to Convey Notice—C.A.
By TINA BAY, Staff Writer
A lis pendens filed against a piece of real property before escrow closed
on its sale, but indexed by the county recorder after the escrow’s closing, did not put buyers on constructive notice of the claim against the parcel, the Fourth District Court of Appeal ruled Friday.
Affirming a summary judgment order by Orange Superior Court Judge Clay M. Smith, Div. One held that the purchaser of a Mission Viejo property took title to the parcel free and clear of a claim brought by a woman alleging she was entitled to it under a previously canceled sales agreement.
One day before escrow closed on the sale of the property to Exon Martinez, Kristina Dyer filed suit against sellers Juan Carlos and Aida Rojas claiming they breached an earlier agreement to sell their property to her. That same day, Sept. 9, 2004, Dyer also filed a lis pendens against the property with the Orange County Recorder’s Office.
Deal Collapses
Dyer allegedly agreed to purchase the property from the Rojases on June 9, 2003, but the transaction fell through a month later when the sellers sent letter to the escrow company purporting to cancel the sale due to Dyer’s failure to obtain loan approval and close the transaction in a timely manner.
The Rojases relisted the property for sale on July 15, 2004, and Dyer several weeks later contacted the former listing agent to tell him she had a prior sales agreement under which she remained “ready, willing and able” to purchase the property.
Dyer’s lis pendens against the parcel was not indexed until Sept. 14, four days after escrow closed on the sale to Martinez.
In an amended complaint following the sale, Dyer sought specific performance of the agreement of her sales contract with the Rojases based on their alleged breach, and also sought relief against Martinez.
Martinez moved for summary judgment on the ground that Dyer’s lis pendens did not provide constructive notice of her claim against the Rojases’ property. Granting his motion, but rejecting Dyers’ motion for summary adjudication of Martinez’ affirmative defense on the same issue, Smith ordered Dyer’s lis pendens expunged.
Claimant’s Burden
Agreeing with the trial judge’s ruling, Div. One rejected Dyer’s argument that it should literally apply Code of Civil Procedure Sec. 405.24, which provides that “[f]rom the time of recording the notice of pendency of action, a purchaser, encumbrancer, or other transferee of the real property described in the notice shall be deemed to have constructive notice of the pendency of the noticed action as it relates to the real property….”
Although her lis pendens had not been indexed and could not have been located by a title search on Sept. 9, 2004, Dyers argued that Martinez had constructive notice of her claim the day she filed it with the recorder’s office.
Writing for the panel, Justice Richard M. Aronson said that neither caselaw nor common sense supported Dyers’ position.
“Placing the risk of loss due to a recorder’s delay in indexing on a claimant provides the claimant with the incentive to ensure the recorder properly and timely indexes the lis pendens,” the jurist explained. “Placing the risk with the innocent purchaser or the purchaser’s title insurer does nothing to ensure the lis pendens is properly and timely recorded.”
There was no basis for rewarding Dyer’s “lack of diligence,” he noted, pointing out that she filed suit and recorded her lis pendens over one year after agreeing to buy the property, one and-a-half months after the property was relisted for sale, and three weeks after informing the former listing agent of her claim to the property.
Justices Richard D. Fybel and William F. Rylaarsdam concurred in the opinion.
The case is Dyer v. Martinez, 07 S.O.S. 943.
Copyright 2007, Metropolitan News Company