Lis pendens

[glenn walker]

A Lis Penden is a Public Notice recorded that pending litigation is being proposed or on going and it's to protect a Plaintiff from defendant from liquidation of the asset prior to a potential judgement.

The only way it's cleared is by the owner filing a claim with the Courts to have it removed because it was recorded with false intentions or punitive in nature.

There is often no dollar amount to pay because it proceeds any trial or judgement so again only the owner can request a Judge to order it removed.

I've had Jack Wagons record Lis Pendens on property for bogus claims like a argument of non payment over a $500 window installation which was never done and I filed a lawsuit against the contractor for filing a frivolous claim and clouding the title of a half million dollar property. The judge ruled in our favor lifted the lis pendens and hit the contractor with a $5,000 judgement for damages for him clouding our title held up the closing of escrow for almost two months. But in general no title company will insure until the Lis Pendens issue is cured and removed.

 

[Terrel L. Shields]

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

Good question, in reality, few people would and perhaps could proceed. OTOH, reminds me of the judgment I had against a hay buyer who stiffed me for about $3,000. It came back to bite him when he inherited his parents place and tried to refi. The title company found the old judgment which was against him, not the property. In lis pendens and nothing in the title would have shown up, just the credit history of the borrower. I'd mention and state I don't know its impact and assume there is no impact on the market value of the property.

 

[BRCJR]

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

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The ole AI says:

the current owner is not the true owner,
another party has a right to ownership,
the deed was fraudulent or improper,
Heir or family member claims ownership
Former spouse claims improper transfer
Claim that the deed was forged or invalid
encroachments, easement rights,
property line disagreements

Even with a new loan closing, the dispute still affects the property’s rights.

 

[Fernando]

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The ole AI says:

the current owner is not the true owner,
another party has a right to ownership,
the deed was fraudulent or improper,
Heir or family member claims ownership
Former spouse claims improper transfer
Claim that the deed was forged or invalid
encroachments, easement rights,
property line disagreements

Even with a new loan closing, the dispute still affects the property’s rights.

Just put a disclaimer/hypothetical condition that the Lis Pendens has no effect on subject's appraised value.

 

[sputnam]

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?

We appraise real property. We don't appraise the owners, buyers, agents, or attorneys.

 

[Gobears81]

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?

My reports will usually say that the property rights are fee simple and unencumbered, and most appraisers have limiting conditions that assume marketable title. Outside of reporting the lis pendens, analyzing its effect on market value is outside of most appraisal SOW. Some lis pendens are more dubious than others, so as someone else said, this is more of an issue for attorneys than for appraisers IMO.

 

[Mark K]

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The ole AI says:

the current owner is not the true owner,
another party has a right to ownership,
the deed was fraudulent or improper,
Heir or family member claims ownership
Former spouse claims improper transfer
Claim that the deed was forged or invalid
encroachments, easement rights,
property line disagreements

Even with a new loan closing, the dispute still affects the property’s rights.

Apparently the "ole AI" didn't understand the question or the question was asked incorrectly.

If a Lis Pendens is due to any of these claims, the title company will not insure and the lender will not allow a closing until the LP is cleared up.

If a claim occurs after the closing, there is no Lis Pendens. Any of these claims, and more, can occur after closing, hence the requirement by the lender for title insurance.

 

[BRCJR]

Apparently the "ole AI" didn't understand the question or the question was asked incorrectly.

If a Lis Pendens is due to any of these claims, the title company will not insure and the lender will not allow a closing until the LP is cleared up.

If a claim occurs after the closing, there is no Lis Pendens. Any of these claims, and more, can occur after closing, hence the requirement by the lender for title insurance.

I guess the ole AI did not differentiate between a federally related loan closing and a property transfer without a loan by a regulated lender. So maybe the question, I asked AI, was not specific enough for this thread. I contend a lis pendens is not always cleared up by a property transfer.

 

[Overimprovement]

We appraise real property. We don't appraiser the owners, buyers, agents, or attorneys.

We appraise RIGHTS in real property. Key distinction.

 

[Mark K]

I contend a lis pendens is not always cleared up by a property transfer.

No disagreement here. A property transfer alone does not clear up a Lis Pendens but when an appraisal is involved with a lender, the title company will require clear title before closing for the lender.

If someone buys a property with cash, no title search and accompanying insurance, and via a quit claim deed, the buyer gets it as-is with judgements, taxes, liens, lawsuits, etc. If they're that stupid, they deserve exactly what they get.

BTW, if a buyer backs out of a deal for good cause (loan is rejected or major property defects generally) and the seller refuses to release the earnest money, all the buyer has to do is file in small claims court. This creates a Lis Pendens on the property and the seller can't sell the house to anyone else until the case is resolved. I've seen that more than a couple of times when I owned a brokerage.