Implications of Lis Pendens for a Buyer?
I am looking into buying a 3 family limestone which has a lis pendens filed by the lender for foreclosure. The wikipedia description for lis pendens sound pretty scary. Does anyone know anymore about this before I bug my attorney?
I am looking into buying a 3 family limestone which has a lis pendens filed by the lender for foreclosure. The wikipedia description for lis pendens sound pretty scary. Does anyone know anymore about this before I bug my attorney?
I’ve seen mortgage amounts (including my own) on Nexis people search. I have a subscription through work, but seems clear these documents are public somewhere.
Thanks to all for the helpful responses. I think the house is worth less than the original mortgage (taken out in 2006). Are mortgage balances publicly available anywhere or do I need to approach the bank to find out how much is left?
We bought after a lis pendens was filed and there was nothing about that (other than a flaky seller) that made the process any different from our end than any other purchase I have ever been involved in. Price was above seller’s balance, so seller’s bank was getting fully paid.
“They’d refinanced a couple of times to get out from under comparably bad mortgages and the net result was that”
Kind of like what the Euro Zone is trying to do. And we, the USandA. Can’t solve too much debt with more debt!
“your title company will not close with the Lis pendens outstanding.”
That problem goes away after successful negotiations with the lender. Iron clad deposit contingency involving escrow! ATTORNEY!
***Bid half off peak comps***
your title company will not close with the Lis pendens outstanding. they won’t guarantee you have free and clear title. It needs to be resolved before closing.
Bug your lawyer and make sure you’re going into it with your eyes open.
We spent six months in contract to buy a place that was in foreclosure and wound up nearly having to sue them to get our deposit back (or close — they finally chose to give us back the deposit). They were underwater and holding an outrageous mortgage. They’d refinanced a couple of times to get out from under comparably bad mortgages and the net result was that, while there was almost enough in what we were paying to cover the basics, including their realtor and the transfer taxes and whatnot, they weren’t going to get a cent. They thought they’d have some money to start over with, but the bank was layering on fees and fines and fines on the fees and fees on the fines and that added up to something just over $100,000. So from a distance anyone would have thought there as enough room to close, but once the bank started piling on … no sirree.
It also meant that there was no room for negotiation: they were in no position to fix *anything* before closing.
I’d do it again, but I’d go into it with a much more clear sense of what I was up against.
as was correctly said before, the current owners are in default of their mortgage and if you are paying less than the lis pendens amount then you need to talk to the bank, as well as the person who owns the property or is represented by the owner. both need to be willing to take a hit (so to speak).
in simple terms bank wouldn’t be getting enough to satisfy its lien, and you wouldn’t get clear title, nor financing, nor a house. you could lose a deposit easily with a deadbeat owner so don’t try.
in a scenario where the amount you are thinking of paying for the house is in excess of the lis pendens amount, it is possibly an easier scenario, but still you need to talk to a lawyer because there is still a lis pendens filed and if you need financing this not just some fine print detail.
in either scenario you need a lawyer who does this stuff.
Definitely bug your attorney. You need to find out the story, i.e. how much $$ does bank need out of the deal to release its claim, and how that compares with price.
Lis pendens is merely notice of a legal claim that must be satisfied that affects ownership rights. Must be cleared at closing if not before. This would be more troubling if the lis pendens were filed by some other party and not the bank. Here, the math either works or it doesn’t — if bank can get paid out of purchase price so it releases claim, you will ultimately be fine. Your lawyer will find out the details.
It’s just a default that’s slated for foreclosure. You can engage the lender and borrower to negotiate a shortsale as the property is most likely underwater or wait for it to hit the auction block (if no one else does the former). Tough either way as banks are sitting on these puppies (denial about the collapsing market and don’t want to realize losses – fair value minus loan balance) and bidding in the auctions is an insider’s game.
Don’t be discouraged but do consult your attorney.
***Bid half off peak comps***