Selling a Property with a Lis Pendens: What You Need to Know

Yes, you can sell a property with a lis pendens, but the journey is far from straightforward. Understanding the implications and requirements is crucial to navigate this process successfully.

What is a Lis Pendens?

A lis pendens is a legal notice indicating that there is a pending lawsuit concerning the property, either regarding its title or a claimed ownership interest. The term comes from Latin, meaning "let the suit hang." It aims to inform potential buyers and lenders that the property's title is uncertain, thereby deterring them from proceeding with the transaction.

In U.S. law, a lis pendens is a formal document recorded in the county land records office. When someone files a lawsuit against a property, the court will issue a lis pendens to alert anyone who may wish to purchase or obtain a mortgage on the property. This filing is significant because it informs the public that a claim against the property is pending.

Impact on the Sale Process

Though the property can technically still be sold when a lis pendens is in place, potential buyers may find the process discouraging due to the presence of the notice. They may be concerned about the outcome of the pending lawsuit and how it might affect their ownership rights. The existence of a lis pendens can significantly impact the sale process, as buyers might become wary of purchasing a property with such uncertainty.

Disclosure Requirements

Sellers are legally required to disclose the lis pendens to potential buyers. Failing to do so could lead to legal consequences or disputes after the sale is completed. Transparency is key in avoiding any future complications. Even with the disclosure, buyers may be hesitant to proceed, which can complicate the sale process further.

Financing Challenges

Lenders are often apprehensive about approving a mortgage on a property with a lis pendens. This can create additional hurdles, as buyers may face difficulty securing financing. Lenders need clarity and assurance that the property's title will not be contested, which is not guaranteed when a lis pendens is present.

Resolving the Underlying Issue

The best course of action is to resolve the underlying issue causing the lis pendens before attempting to sell the property. Addressing the legal concerns can make the property more marketable and alleviate concerns from potential buyers. Clearing the title can make the sale more attractive and smoother.

Seeking Professional Advice

Consulting with a real estate attorney is highly recommended to understand the implications of selling a property with a lis pendens. A legal professional can guide you through the complexities involved, helping you navigate the legal intricacies of the situation. Their advice can be invaluable in determining the best course of action and ensuring that your interests are protected.

While selling a property with a lis pendens is possible, it carries significant challenges that require careful consideration. By understanding the process and seeking appropriate guidance, you can navigate this complex situation more effectively, increasing your chances of a successful sale despite the presence of a lis pendens.