A guide on what is a lis pendens in real estate

Interestingly, in the real estate industry, any individual who believes they have a claim on a property can file a lis pendens if an active lawsuit supports their claim. But, what is a lis pendens in real estate? Here, we’ll explore the definition, usage, and examples to understand the legal concept in detail.                                                                                  

So, what is a lis pendens in real estate?

Lis pendens, aka lis pend, is a formal notice indicating that a property is subject to a claim due to a pending lawsuit. Simply put, a lis pendens puts a big red flag on a real property. It warns potential buyers or loan lenders that there’s a legal issue to be sorted out first.

The legal notice alerts potential buyers to the fact that another party has a claim on the property. And, if the claimant wins the lawsuit, the new buyer may lose the property. Or, be held liable for the claim.

For example, if a bank has filed a lawsuit against the current owner of a lot and the real estate is subsequently sold to a new buyer, that new owner has to assume the responsibility for addressing the litigation concerning the property. This situation highlights the potential for the new owner to face contingent liabilities despite the property changing hands.

Therefore, it can significantly impact the sale price or feasibility of a property sale. Remember that pending litigation is generally unfavorable for any new owner. A lis pendens remains effective until the underlying lawsuit is resolved or the notice is formally withdrawn or canceled.

How can you find out about lis pendens on a property?

The record, available in hard copy or electronic form, is a public document accessible to anyone interested in the property. You or your real estate agent can locate it at the Circuit Court in the county where the property is located. 

The document includes:

• Names of all parties involved in the lawsuit
• Description of the real estate
• Nature of the lien, right, or interest being enforced

How does lis pendens work?

Lis pendens serves as constructive notice to potential homebuyers, indicating that the property’s ownership is under dispute due to ongoing litigation. 

The public notice makes it hard for the property to be sold or refinanced until the dispute is resolved. So, by filing a lis pendens, a party safeguards its claim to the title while the lawsuit is unresolved.

A lis pendens is removed only once the litigation is settled. Due to the potentially lengthy duration of lawsuits, often spanning months or even years, buyers are typically advised to avoid properties with a lis pendens.

When do you use a lis pendens?

You can file a lis pendens in a few scenarios. These include:

Divorce cases

A lis pendens is often filed during divorce proceedings when the distribution of real estate has not been finalized. This is common when the property is registered under one spouse’s name, and the other spouse claims a share. In such a case, the spouse listed on the title will face difficulties selling the property while litigation is pending.

Mortgage default or house foreclosure

Lenders frequently use a lis pendens in cases of mortgage default or property foreclosure. Banks file a lis pendens to inform the public that a property is in foreclosure. 

Contractual disputes

Lis pendens are also common in contract disputes. For example, if a seller agrees to sell a home to Buyer A and then sells it to Buyer B, Buyer A may sue to enforce the original contract. Filing a lis pendens makes it challenging for the seller to proceed with the sale. If Buyer B completes the purchase and the court later rules in favor of Buyer A, Buyer B could lose the property and need to seek reimbursement from the seller.

HOA fee payment default

In some states, homeowners associations (HOAs) can file liens for unpaid fees or covenant violations. An HOA can place a claim and a lis pendens on a house, complicating its sale.

How to file a lis pendens?

While anyone with an interest in a property can draft and file a lis pendens, it’s best to hire a good real estate attorney. This ensures accuracy and adherence to legal standards. Bear in mind that a lawsuit must be active before the notice can be filed and served. Furthermore, this notice must be filed with the Clerk of Court in the relevant county and recorded in the county’s real estate records. 

Last thoughts

A lis pendens serves as an official and public notification indicating that a property is subject to a pending lawsuit or claim. This legal notice is typically filed when a claim directly concerns the property itself. It obligates the property owner to assume any associated litigation as per legal requirements. You can use such notices in divorce proceedings involving the division of marital assets or in cases where a person defaults on a mortgage loan or a fee payment.

Written by Ramona Sinha. November 23, 2024

Ramona is the Senior Content Writer for Kukun. This experienced blogger uses simple and succinct words to decipher the complex phenomenon called life. She has written articles covering a broad range of topics, such as real estate, lending and mortgage, finance, business, taxation, home designs, home improvement projects, decor concepts, and more. An avid traveler, she’s a digital nomad at heart and an animal lover from the depth of her soul.