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Alberta: CLP aka Certificate of Lis Pendens

Friday, November 16, 2018  
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November 9th, 2018  | Kristin Alford

 

What is Lis Pendens? No, she’s not the girl from your high school geometry class. Lis Pendens is a formal notification of a pending legal action. For example, in Alberta, a Certificate of Lis Pendens is the document filed at the time suit proceedings should be initiated and it should be filed within 180 days from filing the lien.

In today’s post we will take a quick look at top things to know about Lis Pendens and then we’ll jump to an article about failing to file a Certificate of Lis Pendens and the impact to an Alberta construction lien.

Things to Know About Lis Pendens

Carl R. Pebworth, Partner with Faegre Baker Daniels, wrote a great quick read on “Four Things to Know About Lis Pendens.”  First, Pebworth advises a Lis Pendens isn’t only a notification of legal action, it’s “machinery whereby a party with an unrecorded or unperfected claim to real property can put third persons interested in the property on notice of the claim or interest.”

Just like state mechanic’s lien variances, the contents of Lis Pendens vary by state. This means the format, the language and perhaps even the deadline may be different from one state to the next and an error could invalidate the notice. Another similarity to the strict nature of mechanic’s liens? Well, just as a lien can be deemed excessive and/or frivolous, an improperly filed Lis Pendens could “constitute slander of title.”

The item on Pebworth’s list that I like best? How powerful a Lis Pendens can be!

“Because lis pendens are typically recorded in the real property records, the effect of lis pendens is that it puts others on notice that there is a dispute concerning the real property. Anyone who purchases or takes an interest in the property after the lis pendens is of record takes their interest subject to the lis pendens. A lis pendens notice therefore enhances the leverage of a party with ambiguous rights or interest in real estate. For example, where there is a dispute about the enforceability of a letter of intent to acquire real estate, the prospective purchaser can add heft to its claim by using a lis pendens notice, provided that the purchaser is confident that it has a binding, but as yet unrealized, right to buy the property. Similarly, if there is a question about the enforceability of a real estate development contract, the prospective developer may protect its interests in the property and forestall further activity involving the alternative use of real estate through a lis pendens notice.”

Alberta & Its Statutory Certificate of Lis Pendens aka Suit

In Keeping Your Hands Lien: Don’t Forget a CLP! the author reviews a recent case where the claimant initiated its suit action within the statutory time frame, however, failed to file a Certificate of Lis Pendens.

According to the article, the claimant commenced suit 178 days after it filed the lien. 178 is within the 180-day suit deadline. However, the claimant did not file a Certificate of Lis Pendens, so after 180 days the lien was discharged. The claimant requested its lien be reinstated, arguing it met the requirements when it served the lien upon the owner.

“[t]he Court in Livello found that although there may be exceptional cases where the CLP requirement can be waived, those exceptions did not apply to Livello’s situation. The Court held that in addition to notice of the lien, active litigation by the landowner is required to warrant a waiver of the CLP requirement. Since the Kus had been silent and took no action to challenge or concede the validity of the lien prior to the 180 day period, the Court declined to reinstate the lien.”

What You Should Know

A Lis Pendens can be a powerful tool, as we saw in Pebworth’s article. And in some cases, it may be a required tool, such as the Alberta case. Don’t lose your security for failing to file the document as prescribed by statute.

NCS Blog

Never underestimate the value and necessity of documentation supporting your mechanic’s lien claim. Backup documentation isn’t just used for preparing a document, there are states that require copies of open invoices and/or a copy of the preliminary notice to be attached to the lien. And, as one subcontractor has learned, backup documentation can play a vital statutory role in supporting a claim.


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