Lis Pendens

Lis Pendens translated means ‘law suit pending’. Lis Pendis are recorded at the County Recorder’s office, the lawsuit creates a cloud on title preventing the seller from easily selling their property or obtaining title insurance.

As a potential buyer considering a property with a lis pendens filed against it, be aware that this means that if the plaintiff of the lawsuit wins, the owner of the property (you when you purchase it) are responsible for any judgment awarded in that legal action. Let suppose that the plaintiff is awarded $50,000- there will be a $50,000 judgment lien attached to your property, ouch.

A property owner’s first remedy, if a lis pendens is filed is to post a bond. If the court determines that the lis pendens was filed in bad faith, or that it does not affect title or possession, then the court may expunge the lis pendens without the posting of a bond. You can take title to a property despite it having a lis pendens, but you assume the risk of any future judgments against the property. If a lis pendens exists, it should be found in the prelim that your title company provides you aa part of your disclosures (if they miss a Lis Pendens, and you complete a purchase and find out afterwards there is a Lis Pendens, you can file a claim against the title insurance company, which they would have to pay out- this is why they are very careful to have their title reports up to date)

Read the preliminary report thoroughly- change of ownership doesn’t wipe a lis pendens and as the new owner you will be responsible if there is any judgment.

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