A document not indexed as required by statute does not impart constructive notice because it has not been recorded as prescribed by law.Cal. Gov't Code §§ 27230-27265. California has an index system of recording, and correct indexing is essential to proper recordation.
Buyers entered into an agreement to purchase the property from the seller. Unbeknownst to them, real party in interest insurer had filed a lis pendens on the property, which was not indexed at the time the buyers received their deed. The buyers did not receive notice of the lis pendens until 19 months after they acquired the property, which they had paid for in cash. The trial court denied their motion for summary judgment, finding that they had constructive notice of the lien. Thus, the buyers sought relief from an order of respondent judge of the trial court, denying their motion for summary judgment and denying their motion for expungement of a lis pendens.
Was there constructive notice to the buyers of the lis pendens on the property?
The court reversed, finding that there was no constructive notice to the buyers of the lis pendens. The court held that where little of the purchase price remained unpaid, or where substantial improvements had been made prior to notice, equity demanded that the buyers retain the property and that the defrauded party be limited to money damages. The court further held that the claims against the seller all involved alleged fraud and conversion, not disputes over title, and therefore the lis pendens was invalid.