What Happens After Filing a Lis Pendens in Real Estate?

CEO Khai Intela
Imagine you're about to purchase a charming cottage by the lake, only to discover that a lis pendens has been filed against it. This notice indicates a pending lawsuit involving the property, and it can...

Imagine you're about to purchase a charming cottage by the lake, only to discover that a lis pendens has been filed against it. This notice indicates a pending lawsuit involving the property, and it can have a significant impact on property sales. In this article, we will explore the aftermath of filing a lis pendens, its impact on property sales, the potential legal consequences, and the resolution process. We will also discuss how to protect your interests and prevent lis pendens situations.

The Ripple Effect of a Lis Pendens

A lis pendens serves as a public notice that a property's title is in question due to pending litigation. It can deter potential buyers and impact the property's marketability. This notice hangs like a sword of Damocles over any potential transactions, signaling impending legal issues.

However, filing a lis pendens comes with legal consequences. Misfiling or mishandling the notice can lead to serious repercussions, such as slander of title and exposure to damages. Compliance with statutory requirements is crucial to prevent invalidity and associated liabilities.

Impact on Property Sales

The filing of a lis pendens raises a red flag for potential buyers and lenders. It notifies them that the property's title is in question due to a pending lawsuit, reducing its appeal. For example, if one spouse files a lis pendens during a divorce to protect their interest in the marital home, potential buyers would be alerted that the property cannot be sold until the divorce is settled.

Moreover, the market value of the property is affected. The lis pendens becomes a matter of public notice, deterring potential buyers and leading to a decrease in the property's market value. Despite this, some buyers may still proceed with the purchase, especially those with the resources and willingness to navigate the legal complexities.

Legal Consequences

While a lis pendens can serve as a protective shield for a party's claim to a property, its misuse can lead to serious legal issues. Technical defects or filing in an unfamiliar jurisdiction may result in the notice being set aside. This can lead to sanctions and escalation to a higher court for review.

Excessive use of a lis pendens notice may also result in damages for slander of title, affecting both real and personal property. It is essential to file the notice correctly and adhere to the statutory requirements to avoid these legal consequences.

The Resolution Process

Resolving a lis pendens dispute involves specific procedures. These include recording a notice of pendency of action, initiating a lawsuit related to the property, seeking dismissal if the action is resolved, and potentially removing or expunging the lis pendens.

The judge plays a crucial role in overseeing the legal proceedings and making judgments on the validity and removal of the lis pendens. The outcome of the litigation can be influenced by factors such as the content of the notice, compliance with statutory requirements, and the merits of the underlying lawsuit.

Negotiated settlements are also an option for resolving lis pendens disputes. These involve settlement negotiations or court judgments in favor of one party. The aim is to reach an agreement that serves the interests of all parties involved.

Removing a Lis Pendens

Once a lis pendens is filed, property sales are affected, and litigation or negotiation may occur. The next step is removing the lis pendens, which can be done through a court order or voluntarily by the party who filed it.

A court can order the removal, known as "expungement," if the notice is found to be invalid or the dispute is resolved. The real property owner can file a motion for expungement, demonstrating that the claimant lacks a valid real property claim. The court provides a recommended format for the necessary documentation.

Alternatively, the party who filed the lis pendens can choose to voluntarily discharge it. This may happen when the dispute is resolved or when they decide not to assert their claim anymore. The voluntary discharge process involves filing a "Notice of Voluntary Dismissal and Release," obtaining a certificate of release from the court clerk, and recording it with the title company.

Protecting Your Interests

Whether you're a property owner caught in a lis pendens dispute or a potential buyer considering a property with a lis pendens, protecting your interests is crucial. Seek legal representation from a competent real estate attorney experienced in lis pendens cases. Their expertise will guide you through the process and help you navigate the complexities.

Conduct due diligence by thoroughly investigating the physical and financial condition of the property, reviewing documents, and understanding property disclosures. This will enable you to make informed decisions and minimize the likelihood of encountering issues related to a lis pendens.

Preventing Lis Pendens

Prevention is better than cure when it comes to lis pendens. Clear communication and proper documentation are key to reducing the likelihood of disputes or claims that could result in a lis pendens. Communicating openly about ongoing litigation stops potential buyers from obtaining a stake in the property without awareness of the legal matters.

Proper documentation ensures accurate filing of the lis pendens and establishes a legitimate claim against the property title. Avoiding errors in document preparation reduces the risk of disagreements and potential lis pendens.

Conclusion

Understanding the aftermath of filing a lis pendens and how to navigate a lis pendens dispute is crucial for property owners and potential buyers. By seeking legal representation, conducting due diligence, and following proper communication and documentation practices, you can protect your interests and minimize the likelihood of encountering issues related to a lis pendens.

Frequently Asked Questions

  1. What are the steps for lis pendens? To file a lis pendens, you need to file a lawsuit with the county clerk, have the suit pending, and record the land in the county land records to attach it to the property's title.

  2. What is the time period when a lis pendens is effective? A lis pendens is effective as long as the legal action is pending, but it can be withdrawn or expunged by a court motion.

  3. What happens in a quiet title action? In a quiet title action, a lawsuit is filed to confirm ownership, fix title errors, or settle ownership disputes. The court order clarifies who owns the property, removes any clouds on the title, and protects the owner from further challenges.

  4. What is the statute of lis pendens in Texas? In Texas, the statute of lis pendens allows the party seeking relief to file a Lis Pendens during an action involving title to real property, the establishment of an interest in real property, or the enforcement of an encumbrance against real property.

  5. What are examples of lis pendens? Examples of lis pendens include disputes over the enforceability of a letter of intent for real estate acquisition, divorce cases involving property division, and foreclosure cases. Lis pendens notices are commonly used in these types of legal disputes.

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