One big surprise that often appears in the chain of title to real property that is being sold here in Florida (condos, townhouses, and single family residences) is a “Notice Of Lis Pendens.”  Unfortunately, the discovery of one of these notices, in many instances, catches just as many sellers off-guard as they do prospective buyers.

Regardless of who is surprised more, the discovery of this Notice in the public records is a major issue, and can slow down or even halt a real estate closing.

What is a Notice of Lis Pendens?

A Notice of Lis Pendens is an official legal document filed in the public records of the county where the land is located notifying the world there is a claim against the subject property.  The Florida Legislature passed laws that govern the requirements of where this document is filed and what must be specified in the notice, including things like names of the parties involved and the relief being sought.  (For details in what is required in a Florida Notice of Lis Pendens, read Florida Statute 48.23.)

The notice acts to provide formal notice to anyone wanting to buy real estate in the State of Florida, as well as anyone wanting to place a lien (encumbrance) on the property, that “a suit [has been] filed that could affect title in [that] property.” Chiusolo v. Kennedy, 614 So.2d 491, 492 (Fla.1993).

Finding a Notice of Lis Pendens in a title search raises a red flag that there are legal disputes being asserted against that must be cleared in order for the seller to convey the property in a condition required by most standard Florida real estate sales contracts.

There are several ways of dissolving the notice but the important thing for purposes of completing a transaction is making sure the title has been cleared of the cloud created by the notice.  This can be done by the seller paying off the lien or by court order, which includes language that “dissolves” the Lis Pendens. Whatever way the notice is dissolved, a document must be recorded in the public records indicating that the notice has been nullified.

The Case of the Heirs, the Multi-Million Dollar Settlement Agreement, and Star Island

Consider the case of Von Mitschke-Collande v. Kramer, 869 So. 2d 1246, 1250 (Fla. 3d Dist. Ct. App. 2004),  where a Notice of Lis Pendens was protecting title to Miami Beach property on Star Island and two heirs successfully reversed a trial court judge’s order dissolving a lis pendens notice — but not before they jumped lots of hurdles.

In this case, Verena and Claudia were heirs to a wealthy man named Siegfried Otto. Mr. Otto was not from Florida; he was someone who had investment property here. The story began when Mr. Otto decided to have his daughter’s husband invest for him.

He entrusted $145,000,000 with his son-in-law, Thomas Kramer, to control and invest the money.

However, things didn’t go well for father-in-law and son-in-law. Four years later, Siegfried Otto wanted his money back.

Ultimately, they negotiated a settlement contract between them where Thomas was to provide his father-in-law with a complete accounting of all the money Siegfried had entrusted with him; and he was also to return all the assets back to Siegfried.

That meant that Seigfried Otto was to get 20 Million Deutsch Marks from Thomas Kramer immediately; Kramer was to sign over all real estate holdings in Florida, and/or pay Siegfried the reasonable value of the properties; and he was to pay back any money that he had used “for private purposes.”

(We don’t know how much of the millions of dollars Kramer had used for these “private purposes” … but that sure gives a hint for why Mr. Otto changed his mind, right?)

Before this could be done, but after the contract was signed, Thomas Kramer sued Siegfried Otto in Switzerland. In that lawsuit, he sought to nullify or void the settlement contract. Otto counter-sued to enforce the deal.

At this point, Siegfried Otto passed away. The lawsuit was ongoing. So his two heirs, Verena von Mitschke-Collande and Claudia Miller-Otto, became substituted parties in the Switzerland litigation.

They won in the Swiss lawsuit. Kramer appealed the result in a Swiss appeals court.

The heirs, Verena and Claudia, then came to Miami, Florida, and filed a lawsuit here in a Florida court to force Kramer to return all the Florida assets per the settlement contract. This was because two parcels on Star Island were part of the settlement deal that Kramer was to return to Otto. The heirs filed Notices of Lis Pendens in the real property records for the Star Island real estate at the same time that they filed their Miami lawsuit.

In doing so, they blocked sale of the Star Island real estate. But Kramer was wily. When the heirs’ first lawsuit was dismissed by the Florida trial judge and they were in the process of appealing his ruling, Thomas Kramer sold the two parcels on Star Island to “Skipworth Properties, Ltd.”

Verena and Claudia challenged the sale, claiming that Skipworth Properties, Ltd., was owned by Kramer. He was just manipulating things.

The Florida appeals court reversed the trial court’s dismissal order and authorized the two heirs to proceed with their case. Kramer moved for the lis pendens to be removed from the record, arguing it had been dissolved when the action had been dismissed earlier. He lost.

The Florida appeals court found that the heirs legally established a “fair nexus” between their legal or equitable ownership of the Star Island tracts and the lawsuit and the Notice of Lis Pendens would not be dissolved. Now, the Notice of Lis Pendens would block clear title to the property until the heirs of Seigfried Otto and Thomas Kramer finalized the litigation about the settlement contract and its provisions demanding that Kramer sign over the Star Island real estate.

Florida Notice of Lis Pendens Problem?

If you have discovered a lis pendens notice was filed against your home, or the property you want to buy has a notice in the chain of title, it’s a good idea to talk with an experienced Florida real estate lawyer about the impact a notice can have on the property. Most real estate lawyers, like our office, offer a free initial consultation.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.