Introduction
Lis pendens, a Latin term meaning “pending lawsuit,” is a legal concept that has significant implications in the real estate industry. It refers to a notice filed in public records, indicating that a property is the subject of a pending legal action. This article will delve into the details of lis pendens in real estate, explaining its purpose, effects, and how it can impact buyers, sellers, and other parties involved in a real estate transaction.
Understanding Lis Pendens
Purpose: The primary purpose of filing a lis pendens is to provide notice to potential buyers or other interested parties that a property is involved in a legal dispute. By doing so, it aims to protect the rights of the party initiating the lawsuit and prevent the transfer of the property’s ownership during the litigation process.
Effects: Once a lis pendens is filed, it effectively clouds the title of the property, making it difficult to sell or refinance. The presence of a lis pendens can deter potential buyers or lenders from getting involved in a transaction, as they may be unwilling to assume the risks associated with a property involved in a legal dispute.
Impact on Buyers: For buyers, encountering a property with a lis pendens can be a cause for concern. It is essential to conduct thorough due diligence to understand the nature of the legal action and assess the potential risks involved. Buyers may need to consult with legal professionals to ensure they are fully aware of the implications and potential outcomes of the pending lawsuit before proceeding with the purchase.
Impact on Sellers: Sellers facing a lis pendens may experience challenges in selling their property. The presence of a lis pendens can limit the pool of potential buyers and may lead to delays or even the cancellation of a sale. Sellers should be prepared to disclose the existence of a lis pendens to potential buyers, as failing to do so can result in legal consequences.
Filing and Removal of Lis Pendens
Filing Process: To file a lis pendens, the party initiating the lawsuit must follow specific procedures outlined by the local jurisdiction. Typically, the filer must submit a notice of lis pendens to the appropriate county recorder’s office, providing details of the pending lawsuit and the property involved. The notice is then recorded in the public records, giving notice to interested parties.
Removal Process: Lis pendens can be removed through various means, including the resolution of the underlying legal dispute, dismissal of the lawsuit, or by obtaining a court order. Once the legal action is resolved, the party who filed the lis pendens is responsible for removing it from the public records to clear the property’s title.
Conclusion
In conclusion, lis pendens plays a crucial role in the real estate industry by providing notice of pending legal actions involving a property. It serves to protect the rights of the party initiating the lawsuit and ensures that interested parties are aware of the potential risks associated with a property involved in litigation. Buyers and sellers should exercise caution when dealing with properties subject to a lis pendens, conducting thorough due diligence and seeking legal advice to navigate the complexities and potential implications.
References
– Cornell Law School. (n.d.). Lis Pendens. Retrieved from law.cornell.edu/wex/lis_pendens
– Investopedia. (2021). Lis Pendens. Retrieved from investopedia.com/terms/l/lispendens.asp
– LegalMatch. (2021). What is a Lis Pendens? Retrieved from legalmatch.com/law-library/article/what-is-a-lis-pendens.html
