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Real estate terms: What is Lis Pendens?

[fa icon="calendar"] Apr 26, 2020 8:00:25 PM / by Eli Karpovski

Eli Karpovski

A  Lis Pendens is a notice that a lawsuit has been filed against real estate property. This is usually filed in the county where the property is located.  Just about anyone can make a claim against a property. This doesn't mean that the claim will not be dismissable. The problem with dismissing a lis pendens is that it requires an order from a judge. 

Why would someone file a lis pendens?

This type of filling would be the result of money owed involving the property. In most cases a lis pendens will be the beginning of a foreclosure due to non payment of a mortgage.  There are a number of other reasons a lis pendens could be filed, here's a few: 

  • Unpaid property taxes
  • Damages from an accident on the property
  • Default on a contract for the sale of the property
  • Non payment to a contractor who worked on the property (typically known as a mechanic's lien)
  • Unpaid utilities (in some areas)
  • Past due balance on special licensing (usually commercial property)

lis pendens hammer

What should you do about it?

If possible, avoid this at a reasonable cost. Getting out of a lis pendens can lead to costly attorney fees, loss of sale contracts and additional holding costs. If you do find yourself served, with a lis pendens it is highly recommended that you hire an attorney.  The laws relating to these types of cases are specific and can be complex.

How does a lis pendens affect your property when it comes to selling it?

Depending on the dollar amount relative to the sale amount, a lis pendens is not the end of all sales. If the amount is small enough the buyer could offer to pay for it out of the purchase price. In cases like this it's likely that the seller doesn't have the cash on hand to settle the debt. 

In another scenario, the seller may have done no wrong and will do what it takes to fight it in court. The time it takes to battle such a lawsuit may not fit the buyer's timeline. In this case the seller may choose to allow the buyer to hold the amount being sued for in escrow until the lawsuit is settled. 

What's interesting about real estate is that there are so many ways to work out an issue with a deal. As long as the law is not broken and all parties involved in the deal agree then a deal can be made.

Topics: Glossary

Eli Karpovski

Written by Eli Karpovski