What is a Lis Pendens and how does it affect property sales?
I've seen many property transactions come to a screeching halt because of a lis pendens filing. If you're buying or selling real estate, understanding this legal notice can save you from major headaches down the road.
Lis Pendens: A lis pendens is a formal notice recorded in public records that alerts potential buyers or lenders that there is an ongoing legal dispute involving a specific property. This notice serves as a warning that the property's ownership or title rights may be affected by pending litigation, and it can significantly impact the ability to sell or refinance the property until the legal matter is resolved.
Introduction to Lis Pendens
The term "lis pendens" comes from Latin, meaning "suit pending." This legal tool has been part of property law for centuries, protecting potential buyers from purchasing property with hidden legal disputes. Think of it as a red flag in the property's records, warning anyone interested in the property that they might be buying into someone else's legal battle.
Common Reasons for Filing a Lis Pendens
Several situations can trigger a lis pendens filing:
Divorce proceedings where spouses disagree about property division
Failed real estate deals where buyers or sellers didn't fulfill their obligations
Construction disputes over unpaid work or defective construction
Inheritance conflicts between family members
Boundary disputes between neighbors
Foreclosure actions by banks or homeowners associations
Legal Implications and Effects
A lis pendens can make selling your property challenging. Most buyers won't touch a property with pending litigation - would you want to buy a house that might not legally belong to the seller? Title insurance companies often won't issue policies until the legal issue is resolved, making financing nearly impossible.
Property owners face restrictions too. Refinancing becomes difficult, and some owners hesitate to invest in improvements while ownership is disputed. Smart buyers might use this situation to negotiate a lower price, but they're taking on significant risk.
Removing a Lis Pendens
Getting rid of a lis pendens requires resolving the underlying legal dispute. This might happen through:
Court dismissal of the case
Settlement between parties
Final court judgment
The timeline varies dramatically depending on the complexity of the case. You'll need a lawyer and possibly a title company to help navigate the removal process.
Rights and Remedies
If someone files an invalid lis pendens against your property, you have options. Courts can award damages for wrongful filings, and you can fight to have baseless claims removed. Buyers should work with title companies to understand their risks and protection options.
Common Misconceptions
Many people think a lis pendens completely prevents property sale - it doesn't. Sales are possible, but buyers must accept the risk that they might lose the property depending on the lawsuit's outcome. Property owners retain their basic rights during litigation, including the right to collect rent or live in the property.
Practical Considerations
A lis pendens often reduces property value temporarily. Insurance costs might increase, and mortgage options become limited. These effects usually disappear once the legal issue is resolved, but the process can take months or years.
Prevention and Best Practices
Before buying property, always get a thorough title search. Read everything carefully, and ask questions about anything unclear. Work with professionals who know how to spot potential issues before they become problems.
Working with Real Estate Professionals
Real estate agents can help identify properties with clean titles and guide you through complicated situations. Lawyers protect your interests, and title companies provide crucial research and insurance services.
Take Action Now
If you're dealing with a lis pendens or want to avoid one, don't go it alone. Bellhaven Real Estate has connections with legal experts and title professionals who can guide you through these complex situations. Our team knows how to handle properties with title complications, and we're ready to help protect your interests.