Lis pendens affects all types of property, even those in foreclosure proceedings. The amount of houses affected by lis pendens has grown so much that ForeclosureData.com has a page dedicated solely to lis pendens listings in Delaware. So why and how does lis pendens affect the sale of a property? Today that’s what we will discuss. As always, if you have something you’d like to add to the conversation leave a comment below or send us an email.
What is Lis Pendens?
Latin for “suit pending” lis pendens secures a plaintiff’s right to specific real property. For instance, if a defendant is selling a house in Brandywine, DE and the plaintiff believes he or she has a right to that property (or to a portion of the proceeds from the sale) they would use a lis pendens to block the sale of the property.
Anyone can file a lis pendens against real property without a bond, however if the defendant feels the lien is wrongful they may demand that the plaintiff post a bond. The court recognizes the plaintiff’s right to protect their interest, but that doesn’t overshadow the defendant’s rights. Delaware requires all plaintiffs to use lis pendens bonds to cover any type of financial loss the defendant may face should the lis pendens be deemed unlawful or wrongful.
The bond proves to the court that the plaintiff is not filing the lis pendens in bad faith. Once the bond is approved then the property holder, as well as those involved in the selling/buying process, will be notified of the lis pendens action.
Here’s a look at Delaware statue concerning lis pendens (please note that mandates may differ within the state so please ask your Jurisco bonding expert about your particular area be it Dover, Greater Newark or Wilmington, DE):
(a) In any action instituted in any court of this State having civil jurisdiction or in the United States District Court for the District of Delaware, any party asserting a claim, the object of which is to affect the title to, or enforce an equitable lien on, real estate may, after filing of such claim, file in the office of the recorder of deeds of any county in which all or any part of the affected real estate is situate a written notice of the pendency of the action, which shall be under oath, and shall set forth:
(1) The court in which the action was brought, the caption of the action and the civil action number;
(2) The object of the action or the affirmative relief sought;
(3) A legal description sufficient to identify the property affected; and
(4) A designation of the names of each party against whom the notice is directed to be indexed.
(b) No notice of pendency shall be filed under this chapter:
(1) On a claim relating to real estate which, if sustained, would entitle the party to recovery solely of money or money damages; or
(2) To enforce a mechanic’s lien or to foreclose upon a mortgage at law, which actions shall continue to be governed by the notice procedures of this Code specifically applicable thereto.
67 Del. Laws, c. 59, § 1.;
To learn more about lis pendens bond and its associated cost please contact Jurisco today.
Money judgments are typical across the United States in a variety of circumstances. A plaintiff may seek damages in an automobile accident, loan repayment, or even medical bills. There are also suits where courts award plaintiffs large sums of money, often millions of dollars, for safety hazards, product mishaps, and defamation of character. No matter the reason for the judgment, the defendant is responsible for seeing the money is paid to the plaintiff even if they wish to appeal the decision.
States mandate supersedeas bonds for appellants to qualify for re-trial by a higher court. A supersedeas bond secures and suspends execution of the judgment already awarded. The party seeking an appeal to a money judgment must post collateral or a bond with the court. This surety bond, often referred to as an appeal bond, satisfies this requirement.
Surety Bond Definition
A supersedeas bond guarantees full payment of the judgment should the appealing party lose its appeal. While the defendant has the legal right to appeal any decision by the court, it does not override the duty to protect other parties involved in the case including those awarded a money judgments. The court has a responsibility to ensure the judgment will not be delayed with frivolous appeal attempts. This surety also covers court cost and interest as well.
New Jersey and Delaware are the only two states that do not require a supersedeas bond when a money judgment is appealed. All other states require a surety or full payment of the awarded amount while the appeal process plays out. In some instances, a state court can override the bonding stipulations if both parties come to an agreement preventing the necessity of bonding. Courts may also waive a supersedeas bond in cases involving child support and require payment regardless of appeal.
Every state uses certiorari, a mandate from a superior court calling up for review from an inferior court the certified records of a particular case. Using this process, courts will determine bond requirements such as cost. States like Florida, Georgia, Texas and California will include a percentage of the judgment amount, or statutory interest rate, when determining the bond amount. In California, for instance, the supersedeas bond amount must be 150% of the judgment amount, whereas in Florida, the amount may include two years of statutory interest for those fees.
Supersedeas Bond Advantages
A supersedeas bond may appear to be a hindrance in the appeal process; however, it actually benefits the appellant. Supersedeas, meaning to “take place of,” suspends the execution of the money judgment. Now the defendant doesn’t have to pay out of pocket and then later try to recover that sum should he/she win the appeal.
The seizure of defendant’s property is also stayed using this bond. Should the judgment call for the transfer of ownership of a house, vehicle, artwork, et cetera, the defendant would be allowed to maintain possession of the property.
Posting collateral is one way to replace a supersedeas bond, but this is not nearly as beneficial as using surety bonding. Here are a few benefits of using a bond rather than depositing collateral/cash with the court registry:
- On average, courts charge a sliding scale to hold the money. This is 2% in most cases. The premium for a collateralized bond is 1%.
- Filing a bond automatically stays the execution of the judgment. Without the bond you must file a separate motion to stay.
- Many states will require a smaller bond than if the money is placed with the court. For instance in CA if a corporate surety bond is used to secure the judgment the bond amount is 150% of the judgment. If collateral is placed with the court’s registry, it must be 200% of the judgment.
- Fortune 500 companies and large insurance companies can qualify for rate credits as well as acquire the bond without collateral.
Using a surety bond may be the best route to take depending on the situation. Discussing the matter with a professional at a surety bond company is a good way to determine if a supersedeas bond applies to your needs.