Slander of Title
Slander of Title, also known as title disparagement of property, is a cause of action involving false allegations about a property interest. In order to have a valid action, the allegations must be: 1) deemed improper; 2) must be communicated to a third person; 3) the statement must be disparaging to the title; 4) the statement is untrue; and 5) the communication caused actual damages.
Those filing liens, a.k.a. “lienors” should proceed carefully when recording liens that are defective or improper. Fraudulent activity is not needed for a property owner to file a lawsuit. The fact that the lien should not have been filed or is erroneous is sufficient for an owner to take legal action.
Some examples of when a valid slander of title claim may arise, is when an association improperly records a lien on a property, impeding the ability to rent, sell or refinance the property. Essentially, the recordation of a false instrument affecting the title, can give rise to a lawsuit, provided the instrument is substantively invalid.
Pleading damages arising from the slander of title is critical. Damages can be compensatory, punitive or “special” in nature. Examples of “special damages” can be financial loss, such as attorney’s fees incurred to remove the “clouding” or “encumbrance” on the subject property. The courts have defined “special damages” as a monetary loss that is measurable and directly related to the effect of the falsehood. Monies expended to counteract the publication, can be recovered as part of the damages. In other words, recovery of your attorney’s fees may form part of the basic elements to the lawsuit.