Lesson. The filing of a lis pendens notice to protect one’s unrecorded interest in real estate will not give rise to liability for slander of title provided there was a basis for filing the notice.
Legal issue. Whether a lis pendens notice, filed by the buyer during litigation about a real estate purchase agreement, constituted slander of title.
Vital facts. The dispute in RCM involved a purchase agreement for a $9MM apartment complex located in Indianapolis. Lawsuits in both Texas and Indiana were filed relating to an alleged breach of the agreement, alleged fraud and an earnest money claim. The buyer filed lis pendens notices in Indiana for the pending Texas and Indiana lawsuits. Following the dismissal of the Texas case, and while the seller was negotiating with a third party for the sale of the property, the seller in the Indiana action asserted a slander of title claim against the buyer for not releasing the lis pendens notice.
Procedural history. After a bench trial, the seller prevailed on the underlying claims associated with the purchase agreement and the earnest money, but the trial court found in favor of the buyer on seller’s slander of title claim. Seller appealed.
Key rules. Ind. Code 32-30-11-3 spells out the requirements for a lis pendens notice in Indiana.
Parties with a claim to title of real estate under a contract for the real estate’s purchase “ha[ve] the kind of interest that requires filing a lis pendens notice under the statute to protect third parties.”
Indiana law is settled that “statements made in a properly-filed lis pendens notice are absolutely privileged … and defendants who file such a notice may not be held liable for slander of title.”
Holding. The Indiana Court of Appeals affirmed the trial court.
Policy/rationale. Seller contended that buyer slandered seller’s title to the real estate by filing a lis pendens notice when buyer knew it would not be able to perform under the purchase agreement. (Seller also claimed that buyer had waived the privilege defense, but the Court rejected the claim on procedural grounds.)
Lis pendens notices “provide machinery whereby a person with an in rem claim to property which is not otherwise recorded [like a purchase agreement] may put his claim upon the public records, so that third persons dealing with the [seller] … will have constructive notice of it.”
The Court reasoned that, since both parties had filed lawsuits regarding their interests in the real estate subject to the purchase agreement, buyer was actually “required” by law to file a lis pendens notice. It follows that the buyer’s notice was proper and therefore absolutely privileged.
Related posts. Your Source For Indiana Lis Pendens Law
I represent parties in real estate-related disputes. If you need assistance with a similar matter, please call me at 317-639-6151 or email me at email@example.com. Also, don’t forget that you can follow me on Twitter @JohnDWaller or on LinkedIn, or you can subscribe to posts via RSS or email as noted on my home page.