Expedited Removal of Lis Pendens in Colorado Apr 19, 2016
Expedited Court Ordered Removal of Lis Pendens in Colorado
Errant recordings in the county property records often come in the form of a “Notice of Lis Pendens.” A fraudulent property recording such as an invalid lien or a sham lis pendens in Colorado can stop a real estate closing cold, which is often the main goal of the person who filed it. A real estate seller typically finds out about such recordings after they are under contract and it is discovered by a title company and listed as a contingency in a title commitment.
A “spurious document” is statutorily defined in Section 38-35-201(3), C.R.S., as “any document that is… groundless, contains a material misstatement or false claim, or is otherwise patently invalid.” Not every lis pendens is a spurious lien, and a spurious lien is not always in the form of a lis pendens. However, a lis pendens recorded against a property is a spurious document when there is no pending court case making a claim to the title or possession of the property.
So what is one to do when they find out a lis pendens or some other invalid or “spurious” document or lien is recorded against property and threatening to halt a sale? Fortunately, one of the few opportunities in Colorado litigation to get in to court quickly is available in such cases, including procedural remedies to have such documents declared invalid and removed by court order in an expedited judicial proceeding. On a petition in the form of a complaint, supported by an affidavit, the district court will issue a show cause order and set a hearing for determination of the validity of the recording.
What is a “lis pendens” and why is it problematic? Lis pendens is Latin for suit pending. As codified in Section 38-35-110(1), C.R.S, a lis pendens is recorded and proper in connection with legal actions “affecting the title to real property.” The nature of the case on which the recording of a lis pendens is proper is litigation relating to “a right of possession, use, or enjoyment of real property.”[1] In essence, the recording of such a notice is to alert potential purchasers that the property is itself subject to the outcome of the identified, and pending, litigation in Colorado courts.[2]
The petition for an order to show cause, as permitted under Section 38-35-204(1), C.R.S. (2015) and C.R.C.P. 105.1(a), provides the procedure in Colorado for a person whose real property may be affected by a spurious document to set an expedited hearing before a district court judge and obtain a ruling within a matter of days or weeks (not months or even years as is typical for ordinary litigation). If the judge determines that the document is a spurious document, the court shall make findings of fact and enter an order and decree declaring the wrongful recording against the property invalid. Section 38-35-204(2), C.R.S. The court’s decree can then be recorded, the title company satisfied, and the prevailing party needing to file the petition seeking the order is statutorily entitled to recover their attorney fees and costs.
MLMW has successfully brought and defended petitions for court review of recording in Colorado litigation, and can assist in evaluating the validity recordings and the utility of the procedures set forth above to have wrongful liens against property removed.
About the Author:
Reed F. Morris is an attorney whose practice ranges several diverse areas of business and real estate ligation. He is a partner at MLMW can be reached at rmorris@mlmw-law.com or by phone at (303) 927-0011 (direct).
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[1] Hewitt v. Rice, 154 P.3d 408, 412 (Colo. 2007)
[2] See, Peoples Bank & Trust Co. v. Packard, 642 P.2d 57, 58 (Colo. App. 1982) (affirming trial court’s release of lis pendens when nothing in plaintiff’s complaint stated a claim for relief affecting the title to real property or a claim relating to possession, use, or enjoyment of the property)