If you guys thought that real estate just meant dealing with properties, you are wrong! It is a vast ocean that covers everything from real estate listings to legal matters. And today’s topic is related to Lis Pendens.
A lis pendens, derived from the Latin word “suit pending,” is a note filed in the public report indicating that a lawsuit concerning a claim on an asset is underway. This is a caution to buyers or creditors that the asset’s title is pertinent to litigation, efficaciously tying the asset to the lawsuit’s final results.
Filing a lis pendens may be a strategic flow in numerous legal situations, protecting the interests of the party starting the lawsuit.
What is a Lis Pendens in Real Estate
Why Should I File A Lis Pendens?
You can’t go about lis pendens like M&Ms. You need to have a situation and valid reasons and trust me, the real estate world is brutal enough for you to get several.
1) To Secure an Interest in Real Estate
One of the primary reasons to file a lis pendens is to secure interest in real estate for the duration of the dispute. When a plaintiff claims an interest in a property, consisting of ownership, an easement, or a lien, submitting a lis pendens ensures that the property cannot be bought or transferred without recognizing the plaintiff’s claim.
We had one client who filed a lis pendens for a warehouse. This ensured their interests were secure until the litigation was complete.
2) To Maintain the Status Quo
Filing a lis pendens helps maintain the status quo concerning the assets during litigation. Without a lis pendens, a defendant may want to switch the assets to an unsuspecting third party, complicating the overall process and making it more difficult for the plaintiff to enforce their claim.
3) To Notify Potential Buyers and Lenders
A lis pendens acts as a red flag for lenders and prospective buyers. When a lis pendens is filed, it will become a part of the general public report, alerting anybody carrying out a title search that the property is involved in litigation.
4) To Prevent Fraudulent Transfers
In some instances, defendants might also try to fraudulently transfer the property to avoid the results of a lawsuit. Filing a lis pendens can save you from fraudulent transfers by ensuring that any property transfer could be a challenge to the litigation.
5) To Protect Financial Investments
For plaintiffs who have invested significant financial resources in an asset, filing a lis pendens is a manner to shield their investment. This is particularly relevant in instances involving real estate development, construction disputes, or joint ventures where massive sums have been invested.
By submitting a lis pendens, plaintiffs can ensure that their financials are safeguarded while the dispute is resolved.
6) To Preserve the Property's Value
A lis pendens can assist in keeping the financial desirability of the property by preventing it from being bought at a discounted fee. In the absence of a lis pendens, a defendant might try to sell the property fast to avoid the effects of litigation, potentially accepting a decreased charge.
By filing a lis pendens, plaintiffs can save you from such rushed sales, ensuring that the property’s price is maintained.
I am aware of a case where filing a lis pendens helped maintain the value of the property in Philadelphia. The owner was trying to sell it off at a reduced price to avoid the litigation process but filing a lis pendens helped get the maximum value for it.
7) To Provide Public Notice
Filing a lis pendens presents the public notice of the ongoing litigation and the plaintiff’s claim to the property. This transparency is crucial inside the legal system, making sure that all events, along with potential buyers, creditors, and different interested stakeholders, are aware of the dispute.
A lawyer friend advised that this has transformed the legal system in real estate. He stated that properties with lis pendens on them have a much higher chance of the public being aware and carrying on with their due diligence.
8) To Avoid Multiple Litigations
A lis pendens can help keep away from more than one litigation concerning the same property. If a property is offered to a third party without being aware of the ongoing litigation, the plaintiff can also initiate additional proceedings in opposition to the new proprietor. This may be time-consuming and expensive.
By filing a lis pendens, plaintiffs ensure that the asset’s name remains clouded till the dispute is resolved.
9) To Address Disputes Over Inherited Property
Disputes over inherited belongings can be complex. When a couple of heirs claim an interest in a property, submitting a lis pendens can prevent any inheritor from unilaterally selling or moving the property. This guarantees that the assets remain subject to the resolution of the inheritance dispute, protecting the parties involved.
How Do I File a Lis Pendens?
Now that you are aware of the whys, let’s talk about the hows of filing a lis pendens. The process is quite simple but detailed and requires some time on your part as well.
This is what is needed:
- Understand the Purpose and Implications of a Lis Pendens
- Determine Eligibility
- Consult with an Attorney
- Prepare the Lis Pendens Document
- File the Lis Pendens with the Appropriate Office
- Serve Notice to All Interested Parties
- Record the Lis Pendens inside the Public Records
- Monitor the Litigation Process
- Release the Lis Pendens When Appropriate
- Consider Potential Legal Challenges
Should I File a Lis Pendens?
The simple answer is if needed, yes you may file a lis pendens. If as a potential buyer, there is a property you are interested in that is undergoing litigation it is best that you know. This is so that you might be able to move ahead with your decision.
As buyers, you will be investing a lot of money into the property and to get the best value for money you may want to know about any skeletons in the closet.
Conclusion
I am sure that this was a lot to take in (it was mostly legal), but we needed this. The several facets of real estate such as listings, marketing, wholesaling, etc are what make it so versatile and alluring. Legals included!
I am glad that we had a chance to go through the interesting topic of lis pendens and how to go about it. So if you are faced with a situation where a lis pendens is needed, you know where to look!