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Heuer & Company v. Harry

2005 WL 3005776 (N.J. Super. Ch. Div. 2005) (Unpublished)

CONTRACTS; LIS PENDENS—Absent an express prohibition in a contract, the filing of a lis pendens by the buyer would not be a breach of the contract even though it might constitute a tort.

In a real estate contract dispute, each party alleged that the other had breached the contract. The buyer sued for specific performance and filed a lis pendens in connection with its suit. One of the counterclaims posed by the seller was that the filing of the lis pendens constituted an actual breach of contract. The Court rejected that argument, holding that “a notice of lis pendens is absolutely privileged where it is ‘designed to give notice and preserve the status quo.’” The buyer stressed repeatedly to the Court that it was “pursuing a contract, not a tort claim.” By statute, “[a] lis pendens notice may be filed in actions where ‘the object ... is to enforce a lien upon real estate or to affect the title to real estate where a lien or encumbrance thereon.’” The same statute provides that “no notice of lis pendens shall be filed ‘in an action to recover a judgment for money or damages only.’” Under case law, “[a] lis pendens also prevents the improper transfer of title to real estate until the court has had time to examine the rights as advanced by the parties.” Consequently, the Court refused to “find that the filing of [the] lis pendens [was] actionable as a breach of contract,” but pointed out that by statute, the seller had the right to have a hearing held as to “whether there [was] a probability that final judgment would be entered in favor of [the buyer] sufficient to justify the filing or continuation of the notice of lis pendens.” In such a hearing, the buyer would have the burden of establishing such probability.

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