Can a subsequent property owner sue for slander of title based on statements made before they owned the property? Lavender v. FCOI Preserve Explained

In Lavender v. FCOI Preserve, the Utah Court of Appeals addressed whether a subsequent property owner can pursue a slander of title claim when the allegedly slanderous statements were made before the owner acquired the property. The court’s affirmative answer provides important guidance for real estate litigation involving clouds on title.

Background and Facts

The dispute arose from competing claims to properties in Park City’s Preserve development. In 2007, Fortress funded a $25.5 million construction loan secured by a trust deed recorded on August 14, 2007. Over a month later, on September 19, 2007, Lavender recorded trust deeds on ten of the properties that he claimed represented legitimate loans, though FCOI later alleged these were part of a “subterfuge” tax arrangement with no intent for actual collection. Through a series of intracorporate transfers, Fortress’s interest eventually passed to FCOI and then to FCOI Preserve. After foreclosure, FCOI Preserve sued Lavender for slander of title, claiming his recorded trust deeds were false and caused reduced sales prices.

Key Legal Issues

The central issue was whether FCOI Preserve, as a subsequent owner, could pursue a slander of title claim based on statements recorded before it owned the properties. Lavender argued he owed no “duty” to FCOI Preserve since it didn’t exist when he recorded the trust deeds, and that allowing such claims would be unfair policy. The court also addressed whether FCOI Preserve qualified for protection under the shelter rule and whether Lavender’s recording was protected by judicial proceedings or rival claimant privileges.

Court’s Analysis and Holding

The Court of Appeals affirmed the trial court’s rulings across the board. Regarding standing, the court noted that slander of title requires proof of publication, falsity, malice, and damages—but not “duty” as in negligence claims. Because FCOI Preserve now owned the same title allegedly damaged by Lavender’s false statements, it could prove its interests were harmed. The court rejected Lavender’s policy argument, noting that the jury ultimately determined FCOI Preserve suffered actual damages from reduced sales prices. The court also held that Utah’s recording act statutes embody the shelter rule, protecting FCOI Preserve because Fortress was a bona fide purchaser.

Practice Implications

This decision clarifies that subsequent property owners aren’t categorically barred from slander of title claims merely because they acquired title after the allegedly slanderous statements. However, such owners must still prove actual damages, which may be challenging if they benefited from reduced purchase prices due to the title cloud. The decision also reinforces that the shelter rule protects transferees from bona fide purchasers, even in slander of title contexts. For practitioners, the case demonstrates the importance of preserving specific legal arguments below rather than relying on alternative theories like judicial estoppel.