Your Guide to Selling a Property with Lis Pendens
If you’re looking to sell your home or property but are behind on mortgage payments, have outstanding tax debts, or are going through a messy divorce and jointly own a home, you could face a lawsuit. This essentially means that a ‘lis pendens’ could be placed on your property. Lis pendens is also known as ‘a notice of pending action’.
No matter your personal circumstances, having a notice of lis pendens on your home or property is never an ideal scenario. However, our experts have put together this in-depth guide to selling a property with lis pendens, where we’ll walk you through the steps, explain your options and provide valuable insights on how you can sell a property with lis pendens.
What is Lis Pendens?
Latin for ‘pending lawsuit’, lis pendens means an official legal notice that signals that a dispute is underway involving a specific property (also known as notice of pending action or notice of notice of lis pendens). Essentially, a lis pendens is a public record, informing potential buyers or lenders that the property in question is part of ongoing litigation. In some cases, a lis pendens on a property or home can prevent the property from being sold or mortgaged until the legal matter is resolved, or the notice of lis pendens is lifted.
How Does Lis Pendens Work?
A lis pendens is usually filed in situations such as ownership or inherited property disputes, foreclosure, unpaid debts or contract violations. Once the lis pendens is recorded in public property records, the notice:
- Lets potential buyers and lenders know that the property is part of ongoing litigation.
- Acts as a legal claim on the property, which may affect the transfer of ownership.
- Safeguards the accuser’s interests by preventing the owner from selling the property, unless the issues are resolved first.
- Is likely to deter potential buyers and prevent house sales – although a property sale can still proceed despite the lis pendens. Read on for more about selling a property with lis pendens.
To find out whether a lis pendens has been filed on your property, you can search the county clerk or recorder’s office for free. This can be done either online or in-person. You’ll just need your house’s title number (sometimes known as parcel number). You can find more information about property and land on gov.uk.
Can You Sell a Property with Lis Pendens?
A lis pendens is extremely likely to complicate the sale of a house or property, but it doesn’t make a sale impossible. So yes, you can sell a property with lis pendens. The main issue is that most buyers will be discouraged by a lis pendens, especially if their bank or lender refuses to approve the loan because of it. However, if the buyer is paying in cash and doesn’t need to rely on a loan to cover the sale, there is a greater likelihood that you will be able to sell the property despite the lis pendens.
In this scenario, the current property owner can still enter into a contract to sell the property. However, it is a legal obligation that the claim of the party who filed the lis pendens must be resolved, either through payment or settlement, before the sale can be completed and the property title transferred to the new owner.
How Do I Sell a Property with Lis Pendens?
Due to the nature of the issue, you’re unlikely to be able to sell your house fast, however, following these steps can increase your chances of successfully selling a property with a lis pendens.
- Disclose a Notice of Lis Pendens to Potential Buyers
Honesty is the best policy – especially when it comes to legalities in the selling process. Much like you must declare issues like Japanese knotweed when selling a property, it is important to fully disclose a lis pendens to buyers upfront. Not only will this maintain trust with the buyers, but will save you getting into legal trouble later down the line. - Opt for Cash Buyers
Cash buyers are more likely to purchase property with a lis pendens as they do not rely on traditional sources of financing a home, such as a loan for a mortgage. A cash buyer can still proceed with the sale despite the legal claim. However, the lis pendens must be resolved, via payment or settlement, before the sale can be completed and ownership fully transferred. - Consider an Online Auction
Selling your home via auction is an excellent way to open up your property to potential buyers, particularly cash buyers, who may be less deterred by the notice of lis pendens. Auction House London are specialists in selling properties with challenges, so, if you are looking to sell your house with lis pendens, consider selling your house easily with us. - Consult with a Solicitor
Work with a solicitor who specialises in property to understand the impact of the lis pendens and explore options to resolve or negotiate the dispute. This sort of legal expert can help you navigate any complications during the sale process and speed up its resolution. - Negotiate with Lenders or the Party who Filed the Lis Pendens
If financing is the issue, you could attempt to first negotiate with the lender or the party who filed the lis pendens against your property, to come to a quick resolution. This could involve negotiating a settlement or arranging a payment plan to resolve the underlying dispute. If the issue is cleared or resolved, the lis pendens can be removed from the public record; this will make your property much more appealing to potential buyers.
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Selling a Property with Lis Pendens FAQs
How Long Does it Take to Remove a Lis Pendens?
The time it takes to remove a lis pendens from a house or property all depends on the reason. We understand that if you’re trying to sell your home with a lis pendens, you will hope for the lis pendens to be removed as soon as possible, but be aware that if the case goes to trial, it could take months or even years to resolve. If the case is settled quickly, however, the lis pendens can be lifted in a matter of weeks.
What Does Discharge of Lis Pendens Mean?
If you receive a discharge of lis pendens, it means that your property no longer has a claim or lawsuit against it.
Will a Lis Pendens Affect My Property’s Value?
Yes, a lis pendens can affect your property’s value because it signals that there is a legal dispute attached to the property. This can put potential buyers off, especially those relying on mortgage financing, as it may not be granted on properties with a lis pendens. However, cash buyers may be less deterred, and auction sales can help you find buyers who are willing to accept the risks.
How Does a Lis Pendens Affect Mortgage Lenders?
Mortgage lenders and other loan providers are often reluctant to approve loans on properties with a lis pendens attached due to the legal uncertainty it creates. The lender could view the lis pendens as a risk to their investment. However, if you’re selling the property to a cash buyer, this is often less of a concern.
Can I Sell a Property with Lis Pendens at Auction?
Yes, selling a property with lis pendens at auction is possible and can be an excellent option for sellers facing legal disputes. It is a great option particularly because it can attract more cash buyers who are more likely to overlook the lis pendens. If selling via auction is something you’d consider for your property with a lis pendens, Auction House London specialises in properties with challenges, including legal challenges, making it easier for you to sell your house smoothly.
What Happens if You Wrongfully File a Lis Pendens?
Wrongfully filing a lis pendens against a property is serious business, and can land the accuser in a lot of trouble with the law. In fact, in some cases, courts may consider the wrongful filing of a lis pendens as an act of malicious interference with the property owner’s rights. A malicious or fraudulent filing can hinder the property owner’s ability to sell or transfer the property, and could lead to significant financial losses. As a result of this, the party who wrongfully filed the lis pendens could be held liable for damages, including the costs associated with delays or failure to sell or transfer the property.
Whether you’re selling an inherited house yourself, or splitting with siblings, speak to our specialists or request a free house valuation today.