Lis pendens

[Bobby Bucks]

When there is a lis pendens on the subject, I typically reference it in the report with a book and page, but don’t reference it in the 3 year history. If the lis pendens is canceled, I mention that. This subject came up at a social event with appraisers present and one participant who fancies himself as F. Lee Bailey even though he’s not an attorney was adamant that it should be very prominent in a report. He likes adding 20 pages of addenda. I think this is not only ridiculous, but could open you up to being sued. In one instance, the party being sued and the party filing the suit were well known “swingers” for lack of a more proper term. Some of the additional documents got deep into moral turpitude and descriptions that would make a longshoreman blush. I’m just a country boy and didn’t even know what some of things being described meant. So anyway, as far as lis pendens and a report, how detailed does one need to get?

 

[Mark K]

I never mentioned it; not my problem. Same with bankruptcy, back taxes, judgements, etc. The only exception is if its been foreclosed on and its a distress sale.

The appraiser is not responsible for items of a legal nature. The title company will find any/all of these items and they'll sort them out prior to closing the loan. It has NO effect on the appraised value.

 

[J Grant]

When there is a lis pendens on the subject, I typically reference it in the report with a book and page, but don’t reference it in the 3 year history. If the lis pendens is canceled, I mention that. This subject came up at a social event with appraisers present and one participant who fancies himself as F. Lee Bailey even though he’s not an attorney was adamant that it should be very prominent in a report. He likes adding 20 pages of addenda. I think this is not only ridiculous, but could open you up to being sued. In one instance, the party being sued and the party filing the suit were well known “swingers” for lack of a more proper term. Some of the additional documents got deep into moral turpitude and descriptions that would make a longshoreman blush. I’m just a country boy and didn’t even know what some of things being described meant. So anyway, as far as lis pendens and a report, how detailed does one need to get?

I think your solution is perfect. Disclose it, and move on with your appraisal.

A lis pending would be paid at closing for a clear title
The definition of market value assumes a clear title at closing for the assumptive, theoretical "Sale" the appraisal creates, so no need to play F Lee Bailey.

 

[BRCJR]

I never mentioned it; not my problem. Same with bankruptcy, back taxes, judgements, etc. The only exception is if its been foreclosed on and its a distress sale.

The appraiser is not responsible for items of a legal nature. The title company will find any/all of these items and they'll sort them out prior to closing the loan. It has NO effect on the appraised value.

In your opinion, this would not be the same as a stigma regarding the property?

Why would someone pay typical market value for a property that has more risk than one without that risk?

 

[BRCJR]

I think your solution is perfect. Disclose it, and move on with your appraisal.

A lis pending would be paid at closing for a clear title
The definition of market value assumes a clear title at closing for the assumptive, theoretical "Sale" the appraisal creates, so no need to play F Lee Bailey.

"A lis pending would be paid at closing for a clear title"

not necessarily....it depends on the kind of lawsuit.

 

[Mark K]

There is no additional risk. The title company won't issue insurance with outstanding lawsuit vs. the subject property and w/out insurance, the lender won't make the loan.

Now if this is a private sale being conveyed via Quit Claim Deed, that's another story but how often does that happen? Also, in that case, how many appraisers require a copy of the title search prior to rendering a value? If that's the case, appraisers should require a title search on EVERY appraisal. For all we know, there could be a pending lawsuit on any property.

THE APPRAISER IS NOT RESPONSIBLE FOR ITEMS OF LEGAL NATURE.

 

[TC]

Who's F. Lee Bailey?

 

[Mark K]

"A lis pending would be paid at closing for a clear title"

not necessarily....it depends on the kind of lawsuit.

What kind of lawsuit do you envision would not be cleared to the lender's satisfaction prior to closing?

 

[Tom D]

A lis pendis means that there is a lawsuit against the peoperty, maybe hasn't gone to trial yet. Title can't cure unless there is a judgement. Or the owner decides to settle it.

 

[ZZGAMAZZ]

Who's F. Lee Bailey?

Long ago his name was like "cornflakes" is to cereal....