Can the lien for spousal support payments to wife from a divorce decree evidenced by a lis pendens on husband’s real property have priority over a recorded mortgage?
Yes, in the case of Benefit Bank v. Rogers, 2012 Ark. 3419, 424 S.W. 3d 812 (2012), the Supreme Court of Arkansas ruled that the wife’s lien for support payments, as evidenced by a lis pendens, took priority over the subsequently recorded mortgage granted by husband’s LLC.
In the Rogers case, the husband and wife were granted a divorce pursuant to the stipulated agreement of the parties (known in Virginia divorce law practice as a separation agreement, property settlement agreement, marital agreement, or stipulation and agreement, entered into the final decree of divorce in accordance with Virginia Code § 20-109 for spousal support and maintenance and Virginia Code Section § 109.1 for the care, custody and maintenance of minor children, and authorized by Virginia Code § 20-155 for all lawful purposes between spouses). The stipulated agreement provided that wife would receive the home and monthly support from the husband for a definite duration, and husband would receive another parcel of real property subject to a lien for the payment of his support obligation to wife. The wife was allowed to file a lis pendens, which she did file in land records prior to entry of the final decree of divorce, referencing the divorce case and her lien (a lis pendens is a notice of the pendency of a case concerning real property which binds subsequent bona fide purchasers for value in Virginia, as authorized by Virginia Code § 8.01-268). The lis pendens in Rogers was granted by the husband individually and as an authorized representative of the LLC which owned the real property.
The husband subsequently gave Benefit Bank a substantial mortgage on the same property, the payment of which mortgage he personally guaranteed. His creditor then filed a complaint for foreclosure in state court, alleging husband and his LLC had defaulted on the loan made by creditor. (Arkansas is a judicial foreclosure state which requires the filing of a legal proceeding, while Virginia is a nonjudicial foreclosure state which allows property to be sold at public auction through a power of sale granted to a trustee in a deed of trust.) The wife was added as a party to the foreclosure suit with an allegation that the creditor’s mortgage lien had priority over any lien of the wife. The wife filed an answer alleging the priority of her lis pendens over the mortgage.
The circuit court trying the case agreed with wife and found wife had a lien with priority over the subordinate mortgage lien of the creditor. The court ruled in favor of the creditor with respect to the husband’s default and entered judgment for the creditor for foreclosure.
The creditor appealed on the grounds that the wife’s lien was invalid because the divorce court did not have jurisdiction to give wife a lien on husband’s real property for support payments, as state law provides that alimony does not create a lien on real estate, that the nature of alimony payments as a monthly obligation instead of a fixed amount prevented the judge from awarding a lien on real property, and that the lis pendens was not valid because there was no separate suit pending against the LLC that owned the real property and the document was not properly acknowledged by a notary.
While the appeals court agreed that state law provided that alimony did not become a lien on land, it noted that the lien for support in Rogers was created by agreement, not unilaterally, and the husband did not challenge the trial court’s authority at the time it entered the final decree of divorce incorporating the separation agreement of the parties. Further, the appellate court disagreed with the creditor’s monthly payment argument, recognizing that the monthly payment was for a fixed period of time and the exact amount of any arrearage due could be determined. Finally, the court dispensed with the creditor’s invalid lis pendens argument by finding that the lis pendens had been filed during pending litigation concerning real property in the divorce, prior to the entry of the final decree of divorce, and the purpose of a lis pendens was satisfied as the creditor had been put on notice of the lien against the real property, which lis pendens did not require an acknowledgement as it did not operate to convey real propery.
It is important to note that Virginia provides that support obligations by an order in Circuit Court become a judgment, as they become due and unpaid, by virtue of Virginia Code § 20-78.2, that the Virginia support order must give notice of this fact by virtue of Virginia Code § 20-60.3 (14), and that support obligations by an order Juvenile & Domestic Relations District Court become a judgment, as they become due and unpaid, by virtue of Virginia Code § 16.1 – 278.15 (C), but that it shall not become a lien against real property until docketed in the county or city where the real property is located. A party obtaining a judgment for an unpaid support arrearage may also recover interest and attorney’s fees. A monetary award can be enforced in Virginia just as any money judgment may be enforced. This blawg has previously described the potential benefits of recording the separation agreement or property settlement agreement or a properly timed deed, along with the final decree of divorce, in a Virginia divorce case. A party seeking to enforce the obligations of a divorce case might also discuss with counsel the advisability of filing a mutually agreed, voluntary, lis pendens prior to entry of the final decree of divorce, given the limitations of Virginia’s lis pendens statute in Virginia Code § 8.01-268.
You should consult with your Virginia divorce attorney or Richmond divorce lawyer James H. Wilson, Jr., concerning how best to secure the performance of obligations owed to you in a Virginia divorce or separation.