How Does Lis Pendens Apply to Real Estate?


Quick Answer

With respect to real estate, "lis pendens" is a legal term that indicates there is a pending suit that may affect the title or ownership of the property, states USLegal. A prospective buyer should research the details of the "lis pendens" before moving forward with the purchase.

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Full Answer

The lis pendens notice serves two primary purposes. First, it ensures that the plaintiff, the person who is making the claim, still has rights to the property if it is sold or transferred, provided the plaintiff wins his case. Second, it alerts potential buyers to the presence of pending legal action on the property, according to Reference.com.

A property with a lis pendens associated with it is less attractive to potential buyers. In fact, reputable mortgage lenders do not provide financing for a property with a "lis pendens," according to Reference.com. Similarly, title insurance companies do not insure the title. Because of this, a sale is unlikely to occur.

Lis pendens is usually an indication that the lender is starting the foreclosure process on a property, according to HGTV. In some states, a Notice of Default is used in place of the lis pendens. Buyers should be aware of the practices in their state regarding foreclosed properties.

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