Published on:

Can My HOA Cloud the Title on My Home?

A Lis Pendens is authorized by A.R.S. §12-1191 to be recorded when a lawsuit is filed that affects title to real property. The purpose is to give notice to prospective buyers and lenders that a title issue may exist.

It has come to our attention that some Phoenix Homeowner’s Associations have aggressively used a Lis Pendens when filing lawsuits against homeowners. In our opinion, this was done for its coercive effect. The recording of a Lis Pendens clouds a homeowner’s title and the home cannot be sold or refinanced until this cloud on title is removed.

Homeowner’s Associations that choose to use this tactic do so at their own risk. There is a fine line between lawsuits that will support the use of a Lis Pendens and those that will not. If a HOA errs, it can be subject to a lawsuit to collect $5,000.00 in statutory damages plus costs and legal fees pursuant to A.R.S. §33-420, the Arizona Statute dealing with wrongful recordings.

The Arizona case of Santa Fe Ridge Homeowner’s Association v. Bartschi, 199 P.2d 646, 219 Ariz. 391 (Ariz.App.2008), contains a good discussion of this issue. Here, the HOA sued homeowner Bartschi to enforce the CC&R’s (deed restrictions) dealing with maintenance issues. A Lis Pendens was recorded by the HOA and the homeowner filed a counterclaim under A.R.S. §33-420 claiming that the Lis Pendens was wrongfully recorded and demanding her statutory damages.   The Court ruled in favor of the homeowner, granted her $5,000.00 in statutory damages plus costs and attorney fees. The HOA filed an appeal.   The Appellate Court also ruled in favor of the homeowner, Bartschi, and ordered that she recover additional costs and fees for the appeal.   In doing so, the Appellate Court reviewed pertinent case law and ruled that a Lis Pendens is properly recorded where any judgment that might ultimately be entered in the underlying lawsuit would expand, restrict or burden a property owner’s rights as bestowed by virtue of that title.   Since the HOA’s lawsuit sought only to enforce existing rights against homeowner, Bartschi, and did not seek to increase or reduce homeowner rights, the Bartschi lawsuit did not affect title to real property and the Lis Pendens was groundless and wrongfully recorded.

The lawyers at Platt and Westby, P.C. have been practicing in the area of Real Estate and Homeowner’s Association law for over 30 years. Contact any of our Phoenix Real Estate lawyers at 602-277-4441 or use the e-mail contact utility on our website at www.plattwestby.com to schedule a no-fee initial conference concerning any Arizona or Phoenix Real Estate matter. We will answer your questions and, where appropriate, suggest potential solutions.

Platt and Westby, P.C. has offices in Phoenix, Arrowhead, Avondale, Scottsdale and Gilbert, Arizona.