Selling a House with Lis Pendens
You want to sell real estate, but your mortgage payments are far behind, you owe a lot of property taxes in the county, or you are in a fierce divorce. Any of these situations may cause someone (such as a lender or your ex-spouse) to sue you, effectively placing the so-called “lis pendens” on your home.
So, can you sell a house with Lis Pendens in Florida at a reasonable price, preferably before the bank foreclosure or before you receive a large number of legal bills? Let’s find out.
What is Lis Pendens?
Translated from Latin, lis pendens means pending lawsuits. Therefore, if you want to sell a house with pending lawsuits, you will receive a formal notice of pending litigation that may interfere with the sale. Pending litigation is a written notice stating that legal proceedings related to real estate have been.
Usually, the claim involves the ownership of the property or the claimed interest in the property. The notice is usually submitted to the county records office, so there is a record of actions to alert potential buyers to the dispute. Pending matters are recorded on the ownership of the house, just like any other lien or mortgage.
Why Would Anyone Show a Pending Order?
Some common situations may lead to the filing of a pending condition of a property:
Foreclosure actions are the most common cause of pending litigations. This happens when a lender (such as a bank or other financial institution) sues a homeowner who has not paid the mortgage. However, imminent foreclosure does not necessarily mean impossible sales. Although foreclosure will cast a shadow on property rights, if a buyer is willing to pay a price higher than the amount owed, the problem can usually be solved by the bank.
On the buyer’s side, it may take longer to buy a house from foreclosure, but it does not necessarily bear more risk than any other sale.
If the homeowner has a delinquent account, the homeowner’s association can file a property lien. The same is true for contractors who are not paid for their work. In these cases, the outstanding amount may be small compared to the total value of the house.
If there is a dispute over the validity of the claim, but the seller wants to sell the house, they may choose to link the lien with the pending matters.
Whenever one or more parties claim the ownership of the house, as in the case of divorce, the pending lawsuits on a property may play a role. Although the laws vary from state to state, in Florida, a party may seek to put a pending order on the property as a way to freeze sales before the judge determines the ownership of the property.
This can also happen when the beneficiaries compete for the will in an attempt to change the distribution of estate assets.
Real Estate Tax
This is one of the most basic items inspected by title agents and all unpaid taxes must always be paid when the property is sold.
How does Lis Pendens Affect Sales?
Technically, the homeowner can continue to sell the house under pending conditions, but it may be difficult to find a buyer, especially because banks usually do not agree to borrow money to buy. If a buyer can buy a home without obtaining a mortgage, the sale is more likely to go smoothly, especially in the case of fair dealing.
The owner can sign a contract to sell the property, but before the ownership can be freely and clearly transferred to the buyer, the claim of the person who raised the pending matter must be paid or resolved.
If there is a lis pending due to a dispute over the property line, and the cash investor buys the house before the dispute ends, the cash investor must accept the final result of the dispute.
That was all about lis pendens in Florida. If you want to learn more, you can always connect wit us for details.