[WSBARP] Seeking Suggestions on Drafting Approaches to a PSA subject to a lawsuit

[Ann Marshall]

Hi Michael,

If there is so supersedeas bond (or other order re: stay) and no recorded lis pendens, a title company might insure despite the appeal—it's worth checking. There were previous, conflicting cases on the effect of a lis pendens with no stay: Spahi and Pallis (fun fact: those cases were decided a week apart by 2 different panels in Div. 1!). There's a Div. 2 case this year that deals with the issue: Guardado v. Taylor, 17 Wn. App.2d 676 (2021). Spahi and Pallis muddied the water about whether a lis pendens is sufficient to tie up the property without a stay pending appeal, but I believe the court in Guardado held that a sale should be valid if the lis pendens is released (at least, if the release is recorded before the sale deed, not dated before, but recorded after, as happened in the case). I don't have any ideas about alternative security in the event a title company still will not insure, but thought this worth throwing out there in case it may help.

Good luck!

Ann






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Ann T. Marshall, Esq.
Mediator/Arbitrator



JAMS - Local Solutions. Global Reach.TM

1420 Fifth Ave. | #1650 | Seattle, WA  98101

Cell/Text: 206.619.8043

E-mail: amarshall at jamsadr.com

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From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> on behalf of msafren at jennylinglaw.com <msafren at jennylinglaw.com>
Sent: Friday, October 1, 2021 4:17 PM
To: wsbarp at lists.wsbarppt.com <wsbarp at lists.wsbarppt.com>
Subject: [WSBARP] Seeking Suggestions on Drafting Approaches to a PSA subject to a lawsuit


Hello Real Property Brain Trust,



I wanted to solicit your collective thoughts and suggestions on drafting provisions in the purchase and sale agreement to protect the buyer of a commercial property, when said commercial property is the subject of a lawsuit from a previous buyer who defaulted on the purchase.



Previous buyer initiated suit against the seller and lost.  Previous buyer has filed an appeal and the appeal is still active.  As such, present buyer is concerned that should previous buyer prevail in the appeal, the Court may order the property to be sold to the previous buyer under the concept of specific performance.



Since the lawsuits are part of the public records, the title company will exclude such an event from the title policy coverage.



My thoughts on a solution so far – 1) indemnification – have the seller indemnify, hold harmless, and defend buyer in the event that previous buyer makes any claims of ownership of property and 2) surety bond – have the seller obtain a surety bond as a funding mechanism in the event that previous buyer’s claims diminish the value of buyer’s ownership in the property



I welcome all of your thoughts, advice, and input.



Thank you in advance



Warmest regards,

Michael S. Safren, Esq.
Attorney at Law

14900 Interurban Ave. S., Ste. 280 | Seattle, WA 98168
11900 NE 1st St., Bldg. G - Ste. 300 |  Bellevue, WA 98005
P: (206) 859-5098 | E: msafren at jennylinglaw.com<mailto:msafren at jennylinglaw.com>
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