No real estate transaction, whether you’re a buyer, seller, or investor, is without difficulties. Zoning rules, lease agreements, contracts, and other factors can all make or break a deal. Not to mention the stress of gathering lenders, title companies, buyers, and sellers at closing with all of the necessary documents and signatures. However, purchasing real estate can be made even more difficult when the title to the property is unclear. Before you buy or sell, you should learn more about titles, ownership, and something called lis pendens. So, let’s take a look at the Lis Pendens Foreclosure Notice in Real Estate and what happens after the Lis Pendens is filed.
What is Lis Pendens
A lis pendens is a public notice that a lawsuit has been filed against a piece of real estate. A Notice of Lis pendens is related to the idea that a property buyer must accept any existing litigation related to the property.
If a bank sues the owner of a lot and a new buyer purchases it, the new owner inherits the lawsuit; the sale of the property does not preclude the plaintiff from pursuing redress through litigation. It may constitute a potential liability.
How Does a Lis Pendens Work?
Lis pendens simply translates to “suit pending” in Latin. This could hurt the sale price or the chance of a sale since any lawsuits that are still pending are usually bad for the owner. The phrase “lis pend” is widely shortened.
Lis pendens gives prospective homebuyers constructive notice, or a warning, that the ownership of real estate is in dispute and litigation is ongoing. You can only file a Notice of Lis Pendens if the claim is clearly about real estate. By filing a “lis pendens,” a person or organization protects its claim to the title until the case is resolved.
Lis Pendens Foreclosure
The most typical usage of lis pendens is in a judicial foreclosure. The mortgage lender initiates the judicial foreclosure procedure by filing a lawsuit. The lender will submit a notice of lis pendens foreclosure with the county recorder’s office in conjunction with the filing of the suit. This is mandated in 22 states.
The lender is required by most state laws to file the notice with the court along with the complaint. The lender is also required to record the notice with the county recorder. This is different from other property disputes, like a dispute over the property during a divorce, where notice is a matter of right, which means that it is allowed but not required.
In a non-judicial foreclosure, the lender must file a notice of default instead of a lis pendens. Both are informational notices that have been filed with the county recorder’s office. A Lis pend usually includes a description of the property as well as the nature of the claim. A default notice offers particular details regarding the defaulted loan.
From the time the lis pendens, or notice of default, is filed until the property is sold, the property is deemed to be in pre-foreclosure. This is when the foreclosure process starts, and the time frame varies by state.
How to Prevent Foreclosure
There are federal and state laws that might assist you in avoiding foreclosure. If you fail to make a mortgage payment, your lender is required by law to contact you to explore your pre-foreclosure loss mitigation options. As a homeowner, you can also take the initiative and apply before the notice of default is issued. Many states have comparable laws, but the options and timelines differ.
Some loss mitigation options, such as a repayment plan, loan modification, or forbearance, are intended to keep you in your house and help you get back on track with payments. Some choices necessitate the surrender of the property, but they also help you avoid a foreclosure sale.
A deed in lieu of foreclosure is one option, as is selling your home on the market or through a short sale. You can work with the lender in different ways, such as by getting your property back during the redemption period, refinancing with a third-party lender, or filing for bankruptcy.
A foreclosure sale can hurt your credit score for seven years. Though some loss mitigation strategies may protect your credit score, failure to pay the full amount owed (as in a short sale) can also hurt your credit.
Can you Sell a House Under Lis Pendens?
Even if there is a Lis pend, you can sell your home, although it may be tough. Lis pend can reduce the value of a property and complicate the sale. When there is a Lis pend on a property, further action must be taken before the deed can be transferred.
Can you buy a house with Lis Pendens?
Because a seller can sell a house with a Lis pend, you can potentially buy a house with a Lis pendens. The purchase could be risky because it doesn’t prevent a lawsuit from happening. As the buyer, you agree to take on the case and are bound by the outcome.
So, if a property has a Lis pend notice, proceed with caution. The litigation may have an impact on your financial commitments and property rights. It may also have an impact on your ability to get a mortgage.
What Happens After a Lis Pendens Is Filed?
A Notice of Lis Pendens protects potential buyers by telling them that a lawsuit is still going on. The notice is a very important warning because the lawsuit could affect the new owner’s rights to their property.
A lien is analogous to a “lis pend.” Both show potential buyers that a third party has a legal right to a piece of property. A lien, on the other hand, applies when a third party has already established an interest in the property.
A lien, for example, may signify that a lender has the right to repossess a property if a debt is not paid. “Lis pend” indicates that a lawsuit or other legal action is pending and that no verdict or settlement has been reached.
When Is a Lis Pendens Notice Used in Real Estate?
Any case involving a home or property might result in lis pend. Here are a few examples of when this occurs frequently:
- Foreclosure: When homeowners fall behind on their mortgage or home equity line of credit (HELOC) payments, lenders typically employ lis pend. Lis pendens is used by banks to alert buyers when a home is under foreclosure.
- Property tax issues: If you are delinquent on your property taxes, your county or local government may serve you with a notice of lis pendens to alert you of a potential lien on your property.
- Divorce: Lis pend can be used in divorce situations where there is a disagreement about property division. For example, if one spouse is named on the home’s title, the other spouse may file a lis pend until the divorce is finalized.
- Contract disputes: Lis pendens can also be the outcome of a disagreement between a buyer and a seller during the sale of a property. Let’s imagine a buyer believes they have the right to buy a house because the contract has been signed, but the seller wants to back out of the deal or sell the house to another buyer. To enforce the sale, the buyer may file a lawsuit coupled with a lis pend
Before bringing a lawsuit, consult with an attorney. Filing a suit on a property for reasons that are not verifiable or valid can result in serious legal consequences, including becoming the defendant.
How to File a Notice of Lis Pendens in Real Estate
A lis pendens can only be filed if an action is already in progress. Furthermore, the pending suit must include real estate, such as land and buildings. If these conditions are not met, the notice may be revoked.
The filing requirements vary by state, but there are normally two steps. To begin, a lawsuit must be filed with the county clerk and remain pending. Second, the lis pend must be recorded in the county land records to be connected to the title of the property. The filing of the lis pend usually serves as notice that there is a dispute over the property, but the rules for how notice is given vary from state to state.
Because the requirements for a lis pendens differ by state, you should consult with a real estate lawyer in your area to find out if you need to file one and how it is served. You can use information you find online to make your lis pend, but it is a hard document that needs to be written in exact language.
It is essential to have an attorney versed with real estate rules in your area and prepare it because one error or mistake can lead it to be expunged. If you cannot afford an attorney, there may be public aid programs in your region that can assist you.
Can You Remove a Lis Pendens?
In most cases, the only way to get a lis pend removed is to settle the litigation. For example, if the lis pend is the result of a pending divorce, it will be withdrawn once the divorce is finalized and a judge determines a property split.
Lis pendens might be settled before or after making a purchase. Debts on the property, for example, may be paid during the sale. Buyers should proceed with caution and consider dealing with a lawyer or real estate agent to confirm that all essential actions to remove the lis pend have been taken.
Why is a lis pendens important?
It is significant because it informs prospective buyers that another party has a claim to the property.
How do you get around lis pendens?
A lis pendens can only be removed by expungement, which requires a court ruling from a circuit judge.
What is the rule of lis pendens?
When two or more cases are underway, the “lis pendens doctrine” allows for the dismissal of a subsequent action. Its purpose is to avoid a defendant from having to defend many lawsuits on the same cause of action at the same time.
Can you bond around a lis pendens?
Yes. A Lis Pendens Surety Bond is a sort of judicial court bond in which the plaintiff seeks to prevent the defendant from selling or lending property. This surety bond guarantees that the plaintiff is filing the Lis Pend in good faith and not under false pretenses.
Who can register a lis pendens?
Anyone who believes they have a claim to a piece of property can file a lis pendens with the Clerk of Court in the county in which they live. A pending lawsuit is required for the lis pend to be legitimate.
What is a withdrawal of lis pendens?
With this legal document, the lis pendens will be taken off the property’s title for good. To be effective, a lis pend release must be recorded with the clerk of the court in the county where the property is located.
Does lis pendens apply to execution proceedings?
It is true that the doctrine of ‘Lis Pend’ applies to both auction purchases in the execution of a decree against the parties to the suit and private alienations by the parties.
When a borrower doesn’t pay back a home loan, the lender will start a foreclosure case to get the property back and sell it. A judicial foreclosure is a court case that is usually needed if you have a mortgage that backs up your debt.
Lis pendens is Latin for “suit pending,” and it refers to the notice that is recorded when a claim or lawsuit is filed against the property. It notifies the public that there is a cloud on the title and can be used if there is a real estate dispute. It is most frequently utilized in court foreclosures.
When the lender files the foreclosure lawsuit, the notice is registered. There are various options for avoiding a forced sale and having the notice removed. Knowing what to do if you receive a lis pend notice could save your home.
Frequently Asked Questions
What is a notice of lis pendens in Texas?
The phrase “lis pendens” means “pending suit” in Latin. Notices of lis pendens are filed in real estate records to notify others, typically prospective purchasers of real estate, that the property in question is the subject of pending litigation.
What conditions are required to be fulfilled for the application of rule of lis pendens?
The suit or procedure must be pending in a court of competent jurisdiction. The suit involves a right to immovable property, either directly or indirectly. The claim or process must not be conspiratorial. Any party may transfer or otherwise dispose of the property in dispute.
Where the doctrine of lis pendens is applicable?
It is noted that the lis pend doctrine applies only when the property is transferred by a party to the litigation and does not apply when the property is transferred by a stranger, i.e., a person who is not a party to the case.