Home Buying in Fairfax>Question Details

Michelle, Home Buyer in Fairfax, VA

Can we buy a house which still has a lis pendens at settlement?

Asked by Michelle, Fairfax, VA Wed Dec 12, 2007

search, a lis pendens came up, which was filed by the U.S. attorney against the seller. Our title company told us later that the U.S. Marshall has agreed to remove the lis pendens if all the sales proceeds go to a government escrow account at settlement. The title company has received a brief letter from U.S. marshall about this arrangement, but detailed arrangement is not available yet because the contact person at the U.S. Marshall is travelling. The settlement company also told us that the title insurance underwriter has agreed to sell us the title insurance. Given these, do we have any risk in buying this house? Is it possible that the U.S. marshall may not remove the lis pendens after the settlement? Will we be protected by title insurance? Your quick response will be greatly appreciated!!

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If you have an agent, do they have an arrangement with an attorney where you can get free advice? We work with Tom Plofchan in Sterling, he knows this stuff back and forth, and runs a title company - Old American.

Make sure you know the rating of the title insurance company if you move forward.

Good luck.
0 votes Thank Flag Link Sun Jun 29, 2008
I would not buy the property without consulting a real estate attorney. In my experience, title insurance company will not issue the title for such a property. If they are, perhaps there is some fine print, with some coverage gaps. I can not stress more about checking with couple of real estate lawyers.

The RealtyGeeks Team - we care.
Web Reference: http://www.realtygeeks.com
0 votes Thank Flag Link Wed Dec 12, 2007
As the others suggest, consult a good real estate lawyer. I'm not a lawyer, so please discount my comments accordingly. And, as a Realtor, I've been told not to practice law, so I won't/don't. But here are some things to discuss/clarify/ask your attorney.

First, a lis pendens means a suit may be filed...not that one already has. Still, as noted, it will cloud the title and is something to take seriously. Second, while it's reassuring that the title company says the Marshall will remove the lis pendens under certain conditions, and that the title insurance underwriter says it'll provide title insurance, I wouldn't be comfortable for a couple of reasons. First, all this should be in writing. A phone conversation with someone at the settlement company who talked to someone in the Marshall's office really doesn't carry too much weight. Similarly, a phone conversation with someone at the settlement company who talked to someone who says they'll provide title insurance--especially since the "detailed arrangement" hasn't been provided from the Marshall's office yet--isn't too solid. There could be an awful lot of "he said, she said" if something goes wrong. As I said, I'm not a lawyer, but even a Realtor can say, "Get it in writing."

But that's only your first step. You need to check with a lawyer not just to make sure what's in writing says what you think it does, but whether what's in writing is enforceable. Just because someone writes: "We will provide title insurance under these conditions" doesn't mean the person writing the letter had the authority or knowledge to do so. And if they don't, your recourse might be to sue the title company. Again, ad nauseum, I'm not a lawyer and this isn't legal advice. But this is a potential can of worms.

Hope that helps.

Don Tepper
Solutions 3D LLC
http://www.Solutions3DHome.com
Don@Solutions3DHome.com
866-HOME-WE-GO
_____________________
Realtor with Long & Foster
0 votes Thank Flag Link Wed Dec 12, 2007
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
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I would also have to advise you ask an attorney. Typically a lis pendens will put a cloud on the title and would not allow Title Insurance to be issued. If the Title Insurance IS being issued; I would think they are pretty sure everything is OK. While the Title Insurance would cover you against a loss - do you really want to go through that headache? I wouldn't buy a house unless it had a clear title the day of settlement.
Again - I would seek outside council from an attorney.
0 votes Thank Flag Link Wed Dec 12, 2007
Consult with a real estate attorney for guidance. I can give you my opinion but I am a Realtor not an attorney. This is too serious a situation to not use an attorney.
0 votes Thank Flag Link Wed Dec 12, 2007
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