What to do if you receive a Lis Pendens

Lis Pendens is a latin term that translates to "pending litigation."  In real estate, it refers to a notice that a legal dispute involving a property has been filed.  Essentially, this alerts buyers or lenders to a legal dispute over the property, which can indicate a potential risk for property ownership or transfer.  If this happens, you might want to consult a lawyer for legal advice or a financial advisor to evaluate the impact that it can have on your finances.

How Lis Pendens Works:

The lis pendens process is initiated when a lawsuit involving the property is filed.  A notice is subsequently recorded in the county where the property stands.  This sets off a warning bell for potential buyers or lenders about ongoing legal concerns.  It can help potential buyers know that there is a complication in buying the property so that they could evaluate the risk of investing in a property that someone else might have a claim to.  The repurcussions of a lis pendens also resonates deeply with the filer and the receiver.  For the filer, a lis pendens places a "Cloud on the title", which is a term used to describe any irregularity in the chain of title of property.  This will alert others about their claim on the property.  Meanwhile, for the receiver, a lis pendens can make the property difficualt to sell or refinance until the issue gets resolved.

When Lis Pendens Is Typically Used:

Lis Pendens typically finds its place in legal disputes involving real estate.  These can include divorce, contract disputes and mortgage default.  As an example, consider a divorce case where one spouse may file a lis pendens to block the other from selling the property before its division is settled by the court.  They undertake this step to ensure that the property, which is a significant asset, remains intact.  In situations of mortgage default, a lender may resort to filing a lis pendens at the beginning of a foreclosure process.  This will alert interested parties tha the lender is pursunig legal remediation for the unpaid debt.  As a result, this could also indicate the property may soon open itself up for sale.

How to File a Lis Pendens:

The act of filing a lis pendens requires the preliminary step of filing a lawsuit involving the property.  Preparation and recording of a lis pendens notice at the county recorder's office follow suit, which puts everyone on notice of the pending legal matter.  This notice encapusulates details of the lawsuit, the parties entwined and the property in question.  However, one cannot ignore the legal considerations hitched to filing lis pendens, which involves ensuring the lawsuit is deeply entwined with the property and an understanding that an erroneous filing could lead to a slander of title claim.  Potential filing hindrances may take the shape of the cost of filing and potential counter claim from the property owner.

What to Do If You Receive a Lis Pendens:

Receiving a lis pendens can be daunting, at which point immediate consultation with a real estate attorney could be beneficial to comprehend the implications and formulate a response line.  It is critical to approach professional legal advice when confronted with a lis pendens as it can echo significant repercussions on property rights.  These may include resolving the lawsuit, having the lis pendens expunged or terminated, or losing rights to the property.  Amid these legal repercussions, a financial advisor can become useful, offering guidance for sound financial management during these conflicts.  Simultaneously, an advisor can provide stratgic approaches toward mitigating the possible financial impact of lawsuits, showing a fuller, clearer picture of the financial landscape and ramifications.  However, any legal qustions shoud be directed at a lawyer. Additionally, the impact of a lis pendens on the vlaue of the property could be substantial.  Potential buyers may be deterred, making the property less marketable, and the legal dispute itself could also directly impact the property's value.

Resolution of Foreclosure:

The primary way to resolve the lis pendens is this scenario is to address the underlying foreclosure lawsuit.  The borrower can do this by either paying the outstanding debt, negotiating a loan modification, or pursuing other legal avenues.

Release of Lis Pendens:

Once the foreclossure lawsuit is settled or resolved, the lender or their attorney files a release of lis pendens with the county recorder's office.  This clears the property's title, allowing it to be sold or refinanced without legal encumbrances.

Result:

A lis pendens can make or break real estate transactions.  Therefore, you should carefully consider the legal and financial consequences involved with buying or selling a property when this notice is issued.

NJLegalGroup - 2023