Some seem to think that merely depositing a Notice of Pending Action [fn] is sufficient to give constructive notice of the contents of the law suit to which it refers.
Not so, as the court in Dyer v. Martinez (2007) 147 Cal. App. 4th 1240 reminds us. In order to impart constructive notice, the lis pendens must be properly indexed so that it may impart notice via a diligent title search. If it is not indexed at the time of recordation of a subsequent recording (e.g., of a deed) or is improperly indexed so that it could not be “located”, it is a nullity as to a third party for value without actual or inquiry notice.
For well over 100 years, this has been the long-standing rule for a number of policy reasons, as discussed in the Dyer case and in others. In this way, a Notice of Pendency of Action differs from the automatic bankruptcy stay of which notice need not be given to be effective.
Obviously, this rule can be trumped if the third party is not innocent, or should have known of the pending claim, or actually did know. That’s another discussion for another day.
Moral of the story: record the notice ASAP and make sure it’s properly indexed ASAP. Also, if one has notice that a property may be conveyed away (e.g., there’s a For Sale sign on it), file suit, record the lis pendens and give notice to the owner and the realtor(s), immediately.
[fn] (The terms lis pendens, notice of pendency of action and notice of pending action are used interchangeably.)
