CHAPTER 59

FORMERLY

SENATE BILL NO. 167

AS AMENDED BY SENATE AMENDMENT NO. 1

AN ACT TO AMEND TITLE 25, DELAWARE CODE, RELATING TO PROCEDURES FOR FILING A NOTICE OF PENDENCY OF A LEGAL ACTION THE OBJECT OF WHICH IS TO AFFECT TITLE TO, OR IMPOSE AN EQUITABLE LIEN ON REAL ESTATE.

WHEREAS, under the common law doctrine of lis pendens, any equitable action filed in the courts of this State may be deemed to be notice to the world of the contents of such action; and

WHEREAS, as a consequence, a pending lawsuit could bind a person having an interest in real estate, notwithstanding the absence of actual notice to such person; and

WHEREAS, notices of actions in many different forms are filed with the Recorder of Deeds, which notices cloud title to real estate; and

WHEREAS, there currently exists no established procedure for the filing and canceling of a notice of pendency of an action with the Recorder of Deeds; and

WHEREAS, it Is in the best Interests of the people of this State that they receive notice of the existence of an action which affects real estate In which they may have an interest, and that procedures be established for the form, content, and means of filing and canceling such notices.

NOW, THEREFORE

BE IT ENACTED BY THE GENERAL' ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Title 25 of the Delaware Code by adding thereto a new chapter to read as follows:

"Chapter 16. Lis Pendens

§1601. Written Notice of Pendency of Action;

In any action instituted In any court of this state having civil jurisdiction or in the United States District Court for the District of Delaware, any party asserting a claim, the object of which is to affect the title to, or enforce an equitable lien on, real estate may, after filing of such claim, file in the office of the Recorder of Deeds of any county in which all or any part of the affected real estate is situate a written notice of the pendency of the action, which shall be under oath, and shall set forth. (I) the court In which the action was brought, the caption of the action, and the civil action number, (11) the object of the action or the affirmative relief sought, (111) a legal description sufficient to Identify the property affected and (iv) a designation of the names of each party against whom the notice is directed to be indexed. No notice of pendency shall be filed under this chapter (1) on a claim relating to real estate which, if sustained, would entitle the party to recovery solely of money or money damages; or (ii) to enforce a mechanic's lien or to foreclose upon a mortgage at law, which actions shall continue to be governed by the notice procedures of this Code specifically applicable thereto.

§1602. Recording; Indexing; Cancellation;

Upon payment of the proper fee, the Recorder of Deeds shall record the notice of pendency. Each notice recorded shall be indexed, direct and indirect, against the name of each party designated in the notice of pendency. Such entry shall note next to such name the book and page number where the notice of pendency is recorded. When so directed by order of the Court, or by the recording party, as provided in this chapter, the Recorder of Deeds shall mark "canceled" across the face page of the recorded notice of pendency and the related Index entries.

§1603. Filed Notice of Pendency; Effect as to Persons Claiming Interest in Real Estate Identified in Notice of Pendency;

The recording of a notice of pendency shall be notice to any person acquiring an interest in the real property identified in the notice from or through any party named in the notice from the time of the recording of the notice. Any person claiming an interest in the legal property which is the subject of the notice of pendency is bound by all proceedings taken in the action after such recording and until cancellation or discharge to the same extent as if such person were a party.

Unless and until a notice of pendency is filed as provided by this chapter, no action shall, before final judgment is entered therein, be deemed to be constructive notice to a person acquiring or having acquired a lien on or any other interest in the affected real estate.

§1604. Effective Term;

A notice of pendency shall be effective for a term of three years from the date of recording with the Recorder of Deeds. Before expiration of a term or an extended term, the Court, upon motion of the party recording the notice, for good cause shown, may grant an extension for a like additional term. An extension order shall be recorded with the Recorder of Deeds before expiration of the prior term. An extension order shall be recorded with the Recorder of Deeds before expiration of the prior term and no extension order may be entered by any Court after the expiration of the original term or any extended term.

§1605. Mailing of Notice of Pendency to Parties Against Whom Notice Is Indexed;

Within five (5) days after filing the written notice of pendency with the Recorder of Deeds, the party recording the notice of pendency shall serve or mail a copy of such notice by first class mail to the last known address of each party against whom the notice of pendency has been indexed, and to all persons shown on the public records to have an interest in or lien upon the real estate which is the subject of the notice. Not later than ten (10) days after filing the written notice of pendency, an affidavit of the party recording the notice of pendency or of the attorney for such party shall be filed with the Clerk of the Court in which the action has been filed, indicating compliance with the foregoing requirements, including the parties to whom the notice was sent, the date of mailing, and the address(es) to which the notice(s) were sent.

§1606. Mandatory Cancellation;

The Court, upon motion of any party aggrieved, shall direct any Recorder of Deeds to cancel a notice of pendency if (i) mailing of the notice has not been completed within the time required by §1605 hereof, or (ii) the final judgment entered denying the claim covered by the notice of pendency is no longer appealable; or (111) the claim relating to the real estate is one which, if sustained, would entitle the party solely to recover money or money damages.

§1607. Cancellation Upon Condition of Security;

In an action for the enforcement of an equitable lien, the objective of which is to secure the payment of money, the Court, upon motion of any party aggrieved, as a condition of cancellation of the notice of pendency, may direct that such party post sufficient security to insure the payment of money as may, by the final determination of the action, be ascertained to be chargeable upon the affected real estate. Nothing herein contained shall preclude the posting of bond or other security by agreement of the parties as a condition of cancellation.

§1608. Discretionary Cancellation. Hearing on Probability of Success on the Merits;

The Court, upon motion, supported by affidavit(s), of any party aggrieved, may direct any Recorder of Deeds to cancel a notice of pendency If the Court determines that there is not a probability that final judgment will be entered in favor of the party recording the notice of pendency. The party recording the notice of pendency shall bear the burden of establishing such probability. The Court may order oral argument on the motion. No discovery on such motion shall be permitted unless so ordered by the Court. The order of the Court on the motion may contain such conditions as the Court deems just and proper.

§1609. Voluntary Cancellation by Party Recording the Notice;

At any time,' the Recorder of Deeds shall cancel the notice of pendency upon written request, under oath, for such cancellation and upon payment of the proper fee by the party who recorded the notice, or by such party's attorney of record. The written request shall be recorded.

§1610. Effect of Canceled or Expired Notice;

A canceled or expired notice of pendency shall not be deemed to be actual or constructive notice to any person for any purpose.

§1611. Costs and Attorney's Fees;

In an order either upholding a notice of pendency or cancelling a notice of pendency, the court may. for good cause shown, and in the Interest of justice, direct a party to pay the prevailing party's damages, if any, together with court costs of the action. In addition, the court, in exceptional cases, may award reasonable attorney's fees to the prevailing party. Attorney's fees may be assessed against a party only if the court finds that such party has willfully asserted a claim or defense thereof without foundation in law or fact and/or not supported by a good faith request for an extension of the law, or for an improper purpose such as to harass or cause unnecessary delay in a legal proceeding or transaction.

§1612. Fee for Recording Notice as Taxable Costs;

The fee for recording a notice of pendency shall be taxable as a part of the costs in the action.

§1613. Recording and Marginal Notation of Judgment or Stipulation of Dismissal;

Whenever a stipulation of dismissal is filed, or whenever a final judgment entered is no longer appealable, notice of the pendency of which action has been filed in the Recorder of Deeds, the party who filed the notice of pendency shall cause a certified .copy of the order of final judgment or a copy of the stipulation to be recorded in the Office of the Recorder of Deeds. Upon payment of the proper fee, the Recorder of Deeds shall record the order or stipulation in the manner provided in §1602 of this chapter and shall note the recording thereof on the notice of pendency. If the party who filed the notice of pendency fails or refuses to file a certified copy of the final order or stipulation of dismissal, any party aggrieved by the filing of the notice may cause the order or stipulation to be filed.

§1614. Express Repeal of Common Law

The common law doctrine of lis pendens is hereby abolished and no action instituted after the effective date hereof shall constitute constructive notice to any person unless notice of such action complies with the requirements of this Chapter.

Approved June 29, 1989.