A Lis Pendens is not a legal term that most people are familiar with. For most homeowners, they are aware of the presence of this term only if this filed notice stops them from refinancing a home loan. That’s to say, the real restate concerned is involving a pending lawsuit and this particular property’s title is doubtful. At the same time, this notice is also considered a bad signal for a potential purchaser or lender.
To put it simply, this legal term refers to a written notice, which gives a warning to everyone reads it that there is a pending legal action against the particular property. As you can see now, this is a type of document filed mainly by the County Land Records Office, which is an organization that updates and maintains the property ownership information for a particular county.
In fact, the word lis pendens comes from Latin and it means “suit pending.” Of course, the suit here implies primarily foreclosure. For that reason, many people often confuse them. In fact, they are two different legal processes although they are closely connected. To find out the difference between them, let’s first look at the 3 stages of the foreclosure process. For potential buyers, understanding it well can definitely help you find bargains on foreclosure homes.
By definition, foreclosure is a legal action taken by bank or Loan Company in order to regain possession of the properties that the homeowners fail to pay mortgage loan for. This process consists of 3 steps: pre-foreclosure, auction, and real estate owned (REO). So, it is so wrong to think all the 3 mentioned stages as foreclosure itself. Here only the first step, namely pre-foreclosure, will be focused next since it stands in a closer relationship to what we are talking about.
Profile Publications, Inc. ever explained the 3 steps in New York’s foreclosure process. The first step is Lis Pendens filing, which is also known as pre-foreclosure and has 3 types – Notice of Mortgage Default, Property Tax Delinquency and Unpaid Common Charges. In general, if your loan goes into default for more than 3 months, the lending institutions (the plaintiff) would institute legal proceedings against the borrower (homeowner).
From the above mentioned information, you can learn that Lis Pendens serves as a notification that the mentioned property is involved in a pending lawsuit. And that’s all. In other words, it doesn’t affect the result of the foreclosure process. Specifically, it has nothing to do with the prevention or termination of this legal process. Similarly, it does not get in the way either when the homeowners try their best to save the property in question.
A filed lis pendens means that the foreclosure process is already under way. That’s to say, from the perspective of the homeowners the situation has become worse than the stage of preforeclosure or having trouble making the payments. As a result, the foreclosure is imperative at the request of anyone who is entitled to do so. Since nothing can now prevent the foreclosure, from now on homeowners should develop realistic plans to stop it. These methods include a foreclosure bailout loan, filing a petition for bankruptcy, selling the house, repayment plan, mounting a legal defense against the lawsuit, and a mortgage modification.
By the way, this doctrine involves personal property as well apart from the mentioned real property such as building and land. According to Wikipedia, in most cases lis pendens statutes are applicable to real property only while the common-law doctrine probably still to personal property.