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A lis pendens is a legal notice filed against a property to indicate that title is in question or a lawsuit involving the property may occur. It can complicate the sale process and make it difficult to obtain a mortgage. It is commonly filed during foreclosure or when someone believes they have a legal claim to the property title. Buyers should avoid purchasing properties involved in litigation. The notice is added to the property file and withdrawn when the lawsuit is resolved.
The term “lis pendens” is Latin for “pending dress”. It is filed against a real estate to indicate that title to the property is in question or that some sort of lawsuit involving the property could occur in the near future. When someone sends such a notice, it serves as public notification that the property is involved in a lawsuit. For property buyers, this legal notice is generally seen as a turnoff, as it could devalue the property, complicate the transfer of title, or make it impossible to obtain a mortgage on the property.
One of the most common reasons to file a lis pendens is when a property goes into foreclosure. If a lender believes a foreclosure will be necessary, the notice prevents any attempts to sell the property to evade action, as the legal notice will come up on a title search. One may also be filed if someone believes they have a legal claim to a property title, or in any other circumstance where people want to question the validity of a property title.
A property can be sold with the lis pendens on file. The legal notice does not preclude the sale or invalidate the title, although it may complicate the sale process. Most commonly, buyers choose not to purchase a property that is involved in a pending lawsuit or are unable to obtain a loan to purchase the property because lenders are concerned about the outcome of the lawsuit. In the case of an attached asset, once the attachment is completed, the notice is cancelled.
As a general rule, it is good practice to avoid property that is entangled in litigation. Even if the property has been legally purchased and this can be proven, the new owner may also be involved in the litigation and the lawsuit could prevent the property from developing, reselling and other businesses. Buyers have the right to specify that legal circumstances must be resolved before buying to protect themselves.
To file a notice of a pending lawsuit, someone usually has to go to the office where the land deed is registered. The document is added to the specific property file, along with data about the property’s sales history and property tax history. As a result, when someone withdraws the writ, lis pendens will also appear, alerting people to the existence of a potential lawsuit.
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