Home Buying in New York>Question Details

Kevin, Home Buyer in Brooklyn, NY

Is property under "Lis Pendens" event safe to buy?

Asked by Kevin, Brooklyn, NY Sun Dec 8, 2013

The realtor said the property I'm interested in buying is a divorce case that force the seller to sell at low price, but I'm skeptical. When researched this property online, I found out it has a Lis Pendens event with the Owner and Title Holder belonging to two different names. Could there be title issue? Is it worth the time and money to purchase this home?

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Definitely a question and a task for your attorney to make sure your risk is properly managed. What I can tell you as a broker, is that the seller's side must produce a Marketable Title in order to transfer the property to a buyer. Which means title free of clouds and encumbrance. I'd venture to think that your title company will not insure the title if there are issues that need to be cleared.

Any rel property purchase has some degree of risk, it is important that this risk be PROFESSIONALLY managed, and adequately insured.
2 votes Thank Flag Link Sun Dec 8, 2013
Hi Kevin,
Older a titles have a larger margin for having issues to clear up, even if title companies have been insuring that title for years by omitting certain issues from the policy. Consult your attorney as to the amount of your exposure on this property it MAY be worth the effort.
Flag Mon Dec 9, 2013
How can a Title with issues be cleared? How much money and time are involved? If I buy this property with Lis Penden event, how will it effects my future resale value? Thanks.
Flag Mon Dec 9, 2013
Title issues can occur on any property regardless the type of sale, therefore if you like the property no reason not to consider the purchase--you decide....
2 votes Thank Flag Link Mon Dec 9, 2013
Hi Kevin, There could be title issues on any sale, not just on properties with Liens, which is why you have an attorney handling your purchase. If you are financing- the bank will make very sure there are no encumbrances attached and that's why you purchase title insurance.. Multiple title holders- They will all have to sign the paperwork, for the sale. From my experience...Terry K
1 vote Thank Flag Link Mon Dec 9, 2013
As mentioned below short sales are sold everyday, everywhere. Are they without risk, of course there are risks as unlike traditional transactions the outcome is highly unknown. You can't possibly know there is a Title problem unless a Title report was pulled, do you do that? i always say to my buyer clients, you proceed at your own risk with short sales. If the transaction is successful, you reap the benefits of perhaps purchasing a home at lower than market value, if not, you've wasted time and money. Only you as a purchaser can make the decision as to your risk tolerance.
1 vote Thank Flag Link Mon Dec 9, 2013
Kevin a Lis Penden simply means that the homeowner missed enough mortgage payments for the lender to enter an action of foreclosure on that property. Houses with Lis Pendens are sold everyday everywhere, totally safe to buy. Though Lis Penden doesn't necessarily mean that the transaction will be a short sale, it almost always is. It's best for you to have that Realtor find out if it's a short sale transaction, or if it'll be a regular transaction.

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Javier Meneses
Senior Loan Officer
NMLS #23130
STERLING NATIONAL BANK
310 Crossways Park Drive
Woodbury, NY 11797
jmeneses@snb.com
(516) 606-9648 Cell
(516) 740-4478 Office
(516) 918-5383 Fax
1 vote Thank Flag Link Mon Dec 9, 2013
The Realtor said it is a force sell ordered by seller Attorney (Not a short sale), which makes it even more confusing when the term "Lis Penden" is usually referred as pre-closure or short sale.
Flag Mon Dec 9, 2013
I love the way you asked "could there be a title issue." It could very well be a title issue. I'll agree with Armen below and go a bit further. You will NOT get a title company to give you clear title while there are questions and of course since you intend on financing, your Bank will require title insurance. Why waste your time. move on to the next property.
1 vote Thank Flag Link Sun Dec 8, 2013
Thanks. Does that mean Bank still approve mortgage even if Title is not cleared? How much title insurance usually costs?
Flag Mon Dec 9, 2013
It sounds as if this sale would have a much higher "degree of difficulty" to complete than other sales. In situations that involve individuals that are unwilling to cooperate and work toward a common goal it's often best to evaluate your options carefully and minimize wasted time and money!

Good luck with your decision.

Bill
0 votes Thank Flag Link Tue Dec 10, 2013
You can often pick up a good deal if the property is a Lis Pendens. Make sure you have a good title company. Many times these Lis Pendens deals become short sales where the bank will discount the payoff so you can get a really good deal. If you are interested in learning more, call me.
0 votes Thank Flag Link Mon Dec 9, 2013
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