Case Law Summaries

Rovan, Inc. v. LSP Associates, LLC

• Opinion Date: August 15, 2001
• Real Property Law
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LIS PENDENS—A profit interest in the sale of a particular property is not an interest in property sufficient to support the filing of a lis pendens.

Following a trial in which an independent contractor argued that it had a binding, oral agreement with a developer for ten percent of the net profits from the sale of certain homes, a jury found in favor of the independent contractor. The successful claimant filed Notices of lis pendens against the residential properties. In doing so, it sought to “enforce and declare the rights of plaintiff in and to the property and any and all proceeds of any sale or transfer of the property herein described… .” The developer argued that filing of the Notice of Lis Pendens was improper and inconsistent with N.J.S. 2A:16-6 and relevant cases. In opposition, the successful independent contractor argued that the Notice of Lis Pendens should not be vacated because it was entitled to a share of the net profits from the construction of those homes. “A notice of lis pendens is notice filed on public record for the purpose of warning prospective purchasers that the title to certain property is in litigation and any interest obtained may be constrained.” The applicable statute authorizes the filing of such a notice in “every action ... the object of which is to enforce a lien upon real estate or to affect title to real estate or a lien or encumbrance thereon… .” What is more, the statute provides that, “[n]o notice of lis pendens shall be filed under this article in an action to recover a judgment for money or damages only.” Consequently, it was the Court’s opinion that the filing of the Lis Pendens was improper because the action was for money damages only. Further, the Court was persuaded that the developer would suffer irreparable harm by losing a refinancing commitment if the Lis Pendens was not vacated. In short, a profit interest in the sale of real property is not an action affecting title to that real property.

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