When you’re buying a home, you’ll want to make sure there are no legal issues with the property. Lis pendens means there is a legal dispute over a property, which can make a property difficult to buy or sell.
Whether you’re a homeowner, a potential buyer or someone disputing property ownership, understanding how lis pendens works will help protect your interests.
What Is a Lis Pendens?
Lis pendens is a Latin term that means “suit pending.” It’s a legal notice (sometimes called a reasonable notice) that a property is involved in a pending lawsuit.
Because potential buyers need to know about the suit, the notice is made public and typically recorded in the property’s chain of title.
Examples of litigation that can affect a property include foreclosures, divorces and ongoing code violations.
Can you sell a house under lis pendens?
You can sell your house even if there’s a lis pendens, but it may be difficult. Lis pendens can affect the property value and complicate the sale. When a property has a lis pendens, additional steps are required before the deed can be transferred.
Can you buy a property under lis pendens?
Since a seller can sell a home that has a lis pendens on it, you can potentially buy a house under lis pendens. The purchase can be risky because the purchase doesn’t eliminate the lawsuit. As the buyer, you agree to take on the litigation and become subject to the lawsuit’s outcome.
So, proceed with caution if a property has a notice of lis pendens on it. The lawsuit could affect your financial obligations and property rights. It can also impact your ability to secure a mortgage.
How Does Lis Pendens Work?
A person or entity pursuing a lawsuit involving property can record a lis pendens in the property’s chain of title. In some jurisdictions, this is done by filing a notice of lis pendens with the local county clerk or county recorder. This process protects the plaintiff’s interest in the property.
What happens after a lis pendens is filed?
Lis pendens protects potential buyers by notifying them of pending litigation. The notice is a valuable warning because the lawsuit could impact the new owner’s property rights.
Lis pendens is similar to a lien. Both warn potential buyers of a third party’s legal interest in a property. However, a lien applies when a third party has already acquired an interest in the property.
For example, a lien may indicate that a lender can take possession of a property if a debt isn’t satisfied. Lis pendens warns that a lawsuit or other legal action is pending, and no judgment or settlement has resolved the case.
How long does a lis pendens last?
A lis pendens lasts until the lawsuit is settled. That can be months or years, depending on the case. And a seller can’t avoid a lawsuit by selling their property.
When Is a Lis Pendens Used?
Any lawsuit with a claim that involves a home or property can lead to lis pendens. Here are a few cases when this commonly happens:
- Foreclosure: Lis pendens is frequently used by lenders when homeowners are delinquent on their mortgage or home equity line of credit (HELOC) payments. Banks use lis pendens to notify buyers that a home is in foreclosure.
- Property tax issues: If you’re behind on your property taxes, your county or local government may use lis pendens to notify you of a potential lien on your property.
- Divorce: Lis pendens can be used in divorce cases where there’s a disagreement about dividing the property. For example, if one spouse is on the title to the home, the other spouse might file a lis pendens until the divorce is final.
- Homeowner Association (HOA) problems: If a homeowner has missed HOA fees or fines, the HOA may file a lawsuit using lis pendens.
- Contract disputes: Lis pendens can also result from a conflict between a buyer and a seller during the sale of a property. Let’s say a buyer thinks they’re entitled to purchase a home, perhaps because the contract’s been signed, but the seller wants to back out of the deal or sell the home to another buyer. The buyer may file a lawsuit along with a lis pendens to enforce the sale.
- Safety issues: A city or local government may file a lis pendens to force a property owner to address safety issues. For example, if a business doesn’t pay its electric bills and loses power, it will no longer be a safe environment for its staff or customers. The city might file a lis pendens to force the company to remedy this unsafe condition.
- Dispute of ownership: If you’re involved in a contract dispute over a property, you may need to file a lis pendens if there is a dispute over the sale or ownership.
- Probate cases: If you’re involved in a dispute over inherited property, you may need to file a lis pendens if someone is contesting the will or the distribution of the property.
Talk to an attorney before filing a lawsuit. Filing a suit on a property without verifiable, legitimate reasons can result in serious legal consequences – including becoming the defendant.
Can You Remove a Lis Pendens?
In general, the only way to remove a lis pendens is to settle the lawsuit. For example, if the lis pendens were due to a pending divorce, it would be removed when the divorce is final and a judge rules on the division of property.
Selling a property doesn’t remove a lis pendens; it makes a buyer subject to the lawsuit’s outcome. The buyer could end up being responsible for the seller’s debts or losing the property.
Lis pendens can be settled during or after a purchase. For example, debts on the property might get paid during the sale. However, buyers should proceed cautiously and consider working with a lawyer or real estate agent to ensure that all necessary steps have been taken to remove the lis pendens.
State by state requirements
Because state laws govern lis pendens, requirements and procedures can vary. Whether you intend on filing a lis pendens or are interested in buying a property under lis pendens, your money and property rights are always at stake.
Lis Pendens: Opportunity and Consequences
The consequences of a lis pendens are substantial, so consult an attorney. An attorney can help you understand when you can file a lis pendens in your state, whether it’s a good idea to buy a home under lis pendens and warn you of any potential consequences.