Notices of Pendency: Protecting Sellers in Contracts for the Sale and Purchase of Real Property

November 2009

You represent an elderly client selling a commercial property that is the most valuable asset in her estate. She is in poor heal and needs the money to pay medical bills and living expenses. She receives a good offer from a buyer who has a reputation for being litigious. She has not received any other acceptable offers and does not want to lose this offer. She also fears that the property's value will decline in the near future. She ask you to draft a sales contract that will prevent the buyer from tying up the property if a dispute arises (or is invented by the buyer to gain negotiating leverage) before closing, because tying up the property until a dispute is resolved would cause her sever financial distress. You draft a firm contract with limited seller representations. Among other things, you also include a provision stating that the buyer covenants not to file a notice of pendency if a dispute arises. Is the provision enforceable? should the buyer accept it? Is it necessary? This article provides guidance to real estate attorneys pondering these issues, and includes sample provisions to be used in appropriate circumstances.

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