Family Law Section Blog: Lis Pendens: Securing Client's Real Property Interests in Divorce :

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  • Family Law Section Blog
    July
    25
    2019

    Lis Pendens: Securing Client's Real Property Interests in Divorce

    Cassel M. Villarreal

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    When clients' names in a divorce are not on a real property deed, protect their marital interest with a lis pendens. Cassel McClure Villarreal discusses lis pendens, an effective tool in protecting your client’s real property interest in divorce.
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    Parties to a divorce do not always hold real property jointly. When a client’s name in a divorce is not on a real property deed, it’s good practice to protect the client’s marital interest pending finalization of the divorce, especially in circumstances where the other party may not act in good faith and comply with the restraining provisions of the divorce petition.

    In these situations, a lis pendens is an effective tool in cementing your client’s marital interest in the real property.

    Even in practice, when a petition states that the divorce affects real property, it is rare to have a full legal description of the affected property contained in the petition. However, even when the legal description is contained in the petition for divorce it is rare, in practice, that the marital interest is secured by filing a lis pendens with the register of deeds in the county where the real estate is located.

    A Lis Pendens

    A lis pendens is notice to third parties that the divorce affects certain real property. The Latin term means “suit pending.” Filed correctly, a lis pendens is a public record giving notice to third parties that the distribution of the real estate within the divorce action is not settled, and creates priority over non-recorded prior encumbrances and transfers.

    The lis pendens prevents a spouse from transferring or encumbering the property, and protects the marital interest until there is an agreement of the parties or final judgment of the court.

    When to File a Lis Pendens

    When the divorce petition contains a legal description of real property, Wis. Stat. section 840.10 requires the filing of a lis pendens.

    Cassel McClure Villarreal com cvillarreal derrlaw Cassel McClure Villarreal, DePaul 2000, is a partner with Derr & Villarreal LLC, Beaver Dam, where she focuses her practice on family law litigation and mediation.

    The legal description of real property is not required in a divorce petition. While it is common for a petition to state that the divorce affects real property, it is not common for the petition to contain the legal description of the real property. If the petition does not contain a legal description of real property, the filing of the lis pendens is discretionary.

    Real property in a divorce is not always titled in the name of both spouses. A lis pendens protects the non-titled spouse’s marital interest by ensuring that the titled spouse will have difficulty transferring or encumbering the real property until the lis pendens is released.

    Additionally, if there is concern that a judgment lien or bankruptcy may be filed after commencement of the divorce, a properly recorded lis pendens can help protect your client’s real property interests if their spouse files bankruptcy. The lis pendens creates a recorded interest and a higher priority over the spouse's unsecured creditors in bankruptcy court.

    The trustee in a bankruptcy case has the powers of holding a judicial lien against real property of the bankruptcy estate. Filing a lis pendens asserts the non-debtor spouse’s claim to the real property. If there is a lien (the trustee’s judicial lien) on real property prior to the non-debtor spouse asserting a claim to the real property, the non-debtor spouse’s property rights will be subordinate to the judgment lien.1

    How to File a Lis Pendens

    A lis pendens is recorded with the register of deeds in the county where the real property is located. If there is more than one piece of real property, a lis pendens is required for each property of the divorce.

    The form of the lis pendens must comply with Wis. Stat. section 59.43. Contact the county’s register of deeds for any county-specific requirements. A certified copy of the recorded lis pendens should be filed within the divorce action and circulated to all parties.

    Once there is a final judgment in the divorce, it is necessary to timely release the lis pendens.2 This can be accomplished by incorporating the release into the Findings of Fact, Conclusion of Law, and Judgment of Divorce, and recorded portion of the judgment affecting title to the real estate, pursuant to Wis. Stat. section 767.61(6).

    Avoid Property Loss in Divorce

    Failing to record a lis pendens during a divorce may lead to property loss. Purchasers may innocently buy real estate involved in a divorce, unless a recorded lis pendens warns them not to. An innocent purchaser may not have to give the property back, even if a judge later awards it to your client in the divorce.

    This article was originally published on the State Bar of Wisconsin’s Family Law Section Blog. Visit the State Bar sections or the Family Law Section web pages to learn more about the benefits of section membership.

    Endnotes

    1In re Fisher, 67 B.R. 666 (Bankr.D.Colo. 1986) and In re Harms,7 B.R.398 (Bankr.D.Colo. 1980).91. 11 U.S.C. § 521(a)(6).

    2See Wis. Stat. section 706.13 (Slander of title).





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