Can an attorney's lien be enforced against property after it's been transferred? Fadel v. Deseret First Credit Union Explained

In Fadel v. Deseret First Credit Union, the Utah Court of Appeals addressed important questions about the timing and enforceability of attorney’s liens on real property, providing crucial guidance for practitioners seeking to protect their fee interests.

Background and Facts

Attorney George Fadel represented a trust in litigation against Deseret First Credit Union over real property in Bountiful. The fee agreement entitled Fadel to one-half of any recovery exceeding $10,000. During mediation, Fadel left before the proceedings concluded. After his departure, the trust and Deseret First reached a settlement whereby the trust would convey the property to Deseret First for $30,000. Deseret First recorded its general warranty deed on October 21, 2011. Three days later, on October 24, 2011, Fadel recorded a notice of attorney’s lien against the property.

Key Legal Issues

The case presented two primary issues: (1) whether an attorney can enforce a lien against real property when the notice is recorded after a third party has already recorded its deed, and (2) whether an attorney can establish a lien on property no longer owned by the former client. The court also addressed the propriety of attorney fees under the bad faith statute.

Court’s Analysis and Holding

The Utah Court of Appeals affirmed the dismissal, applying Utah Code section 38-2-7. The court emphasized that for real property, “an attorney’s lien on real property has as its priority the date and time when a notice of lien is filed with the county recorder.” Since Fadel recorded his notice three days after Deseret First recorded its deed, his lien could not take priority. Additionally, the court held that once the trust conveyed the property to Deseret First, the property was no longer “owned by the client” as required by the attorney’s lien statute. The court distinguished real property from other property types, noting that actual notice is irrelevant for real property liens—only the recording date matters for priority.

Practice Implications

This decision underscores the critical importance of timing in securing attorney’s liens on real property. Unlike liens on personal property where actual notice can protect the attorney’s interest, real property liens are governed strictly by recording dates. Practitioners must be vigilant about recording notices immediately upon learning of potential settlements or transfers. The court also reaffirmed that attorney’s liens can only attach to property owned by the client, making prompt action essential before any conveyance occurs.