A lis pendens, Latin for "litigation pending," is a formal notice filed with a court that informs the public about a pending lawsuit affecting real estate. Filing a lis pendens essentially places a cloud on the title of the property, significantly impacting its sale or transfer. But what exactly happens after a lis pendens is filed? The process is complex and varies depending on jurisdiction, but here's a breakdown of the key events and consequences.
What Happens to the Property After a Lis Pendens is Filed?
After a lis pendens is filed, the property becomes encumbered. This means that the property's ownership is legally restricted. Crucially, this doesn't automatically freeze all activity, but it significantly complicates any potential transactions.
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Notice to the World: The most immediate consequence is public notice. Anyone considering buying, selling, or otherwise dealing with the property is put on notice that a legal dispute exists. Title searches will reveal the lis pendens, potentially deterring potential buyers or lenders.
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Difficulty in Selling or Refinancing: Selling the property becomes extremely difficult. Most buyers and lenders are hesitant to proceed with a purchase or loan while a lis pendens is in place due to the inherent risk and uncertainty. Even if a buyer is found, the closing process is likely to be delayed and more complex.
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Potential for a "Cloud on Title": The lis pendens creates a cloud on the title, essentially a blemish on the property's ownership record. This cloud casts doubt on the clarity and legitimacy of the ownership, which can severely devalue the property.
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Requirement for Court Approval: Any attempt to transfer ownership or obtain financing typically requires court approval, adding significant time and cost to the process.
What Happens if the Lis Pendens is Improperly Filed?
Not all lis pendens are valid. If the lawsuit is deemed frivolous, the court can order its removal. The owner of the property may be able to sue for damages caused by the wrongful filing. The process of challenging a lis pendens involves legal action and could be time-consuming and costly.
How Long Does a Lis Pendens Remain in Effect?
The duration of a lis pendens varies. It typically remains in effect until the lawsuit is resolved, whether through settlement, judgment, or dismissal. Once the underlying lawsuit concludes, the lis pendens is usually released, clearing the cloud on the title.
Can a Lis Pendens Be Removed Before the Case is Resolved?
In some jurisdictions, a judge may order the removal of a lis pendens if it's deemed to be improperly filed or if the plaintiff fails to diligently pursue the case. However, this is not always guaranteed and requires a separate legal proceeding.
What are the Potential Outcomes of the Lawsuit That Impacts the Lis Pendens?
The outcome of the underlying lawsuit directly determines the fate of the lis pendens. If the plaintiff wins, the court may order a sale of the property to satisfy the judgment. If the defendant wins, the lis pendens is typically dismissed, and the cloud on the title is removed. A settlement can also resolve the matter, potentially leading to the release of the lis pendens.
What Happens if the Property is Sold While a Lis Pendens is in Place?
Selling a property with a lis pendens in place is extremely complex. The buyer is usually made aware of the pending litigation and may be required to accept the risk or negotiate terms to protect their interests. The buyer might need to post a bond or escrow funds to ensure that the proceeds of the sale are available to satisfy any potential judgment. The court generally needs to approve the sale.
This information is for educational purposes only and should not be considered legal advice. It is crucial to consult with a qualified real estate attorney for advice on specific situations involving a lis pendens. The laws and procedures governing lis pendens vary significantly by state and jurisdiction.
