Many legal terms and processes come into play in real estate transactions, and both property owners and buyers need to understand them. One such essential term is lis pendens, a Latin term for “suit pending.” Lis pendens birthing in Texas is a key player in property transactions and can have a real impact on the transaction of your property be it buying, selling, or financing your property. As a property owner, potential buyer, or lender, it is essential to learn what happens after a lis pendens has been filed in Texas so that you are adept at maneuvering your way through the nuances of Texas real estate law.
| Category | Description |
|---|---|
| A public notice indicating ongoing litigation involving real property, meaning “pending lawsuit” in Latin | |
| To alert potential buyers, lenders, and interested parties about legal actions affecting property ownership or encumbrances | |
| Must be filed during actions involving title to real property, establishment of an interest, or enforcement of an encumbrance | |
| Filed with the county clerk’s office where the property is located and indexed under each party’s name | |
| Must be served to each party involved within three days of filing | |
| Acts as a cloud on title, potentially slowing or stopping property sales until the lawsuit is resolved | |
| Provides constructive notice to subsequent buyers, who cannot acquire the property free of encumbrances mentioned in the Lis Pendens | |
| Terminates with the resolution of the lawsuit unless an appeal or motion for a new trial is filed | |
| Governed by the Texas Property Code, specifically sections like 12.007 and 13.004 |
The article is a comprehensive guide on lis pendens in Texas — what it is, its legal implications and how to deal with it.
What is Lis Pendens in Texas?
What Does Lis Pendens Mean and Why Is It Used?
In essence, a lis pendens is notice to the public — filed in the public record — that a particular property is involved in a pending lawsuit. In Texas, this acts as a constructive notice to any potential buyers, lenders, or interested parties that the property is involved in litigation. In effect, it signals to others that the title or ownership of the property is in question.
Why is Lis Pendens Important?
A lis pendens serves to give notice of the claim, and its main purpose is to protect the rights of a plaintiff in a proceeding that relates to real property. This is a legal tool that is used commonly in cases of:
- Boundary disputes
- Real Estate Breach of Contract
- Foreclosures
- Partition (distributing property among owners)
The filing of a lis pendens causes the subject property to be “frozen,” in essence rendering the property unusable for sale or transfer by the owner until the litigation is definitively resolved.
Filing a Lis Pendens in Texas
A few more important steps and procedures involved in filing a lis pendens.
While filing a lis pendens in Texas is a simple enough process, it is both legal and powerful. It includes filing a notice with the proper county clerk office in which the property is situated. Here’s how the filing process breaks down:
Requirements for Filing
In order to file a lis pendens, the filer has to satisfy certain criteria:
- There has to be an active court case revolving around the property.
- The lawsuit must involve a matter like the title, ownership or encumbrance of the property.
- The lis pendens notice has to be served with a valid affidavit summarizing the details of the action.
Information Needed
The notice must include:
- The caption of the court where the suit is filed.
- The case number.
- A legal description of the property, in meticulous detail, so there is no doubt whatever as to what property is being referred to.
Once the notice is filed, it becomes part of the public record and can be seen by anyone searching the title on the property.
The Effects of Lis Pendens on Property Transactions
Impact on Property Sales and Financing
In Texas, a lis pendens can cause major disruption of property transactions. From the moment it’s filed, the property is mired in legal uncertainty, which can scare off buyers and lenders and even real estate agents.
You may also read(how real estate can help you build wealth on reddit)
Impact on Buyers
A lis pendens is a red flag for would-be buyers. Real estate that is caught up in a lawsuit is not something anyone wants to buy because they might lose money or have a hard time securing clear ownership rights. Buyers may walk away from the deal or demand deep discounts to compensate for the risk.
Impact on Sellers
A lis pendens filing can be especially infuriating for property owners. The notice essentially bars the sale or refinancing of the property until the legal dispute ends. This can put sellers in a bind, causing delays, financial strain, or even a total inability to finalize the deal.
Impact on Lenders
Lis pendens filings also impact lenders. Banks and lenders are usually reticent to loan on properties embroiled in litigation, after all, the wrong side of that legal battle can risk their investment.
Legal Implications and Financial Consequences
1 Legal Implications of Lis Pendens
The legal implications vary depending on whether a lis pendens has been filed and, if so, whether it was done properly and the nature of the lawsuit itself. In Texas, the filing of a lis pendens without valid grounds can result in serious consequences, including:
Expungement
Should a lis pendens be found to lack a good faith basis in law, a court may order its removal (expungement). This is often the case when the underlying lawsuit does not involve the property in question.
Potential Liability
However, if filed improperly, a lis pendens can expose the filer to legal liability. The property owner, in some cases, may sue for damages, alleging that the filing was not warranted and hurt them financially.
Financial Implications
A lis pendens can have serious financial implications. Here’s how it can make a difference to different stakeholders:
| Stakeholder | Financial Impact |
| Property Owners | Difficulty selling or refinancing the property, loss of potential buyers, reduced value. |
| Buyers | Increased risk of losing their investment if the lawsuit outcome is unfavorable. |
| Lenders | Risk of loan default if the property’s value diminishes or is tied to litigation. |
Removing a Lis Pendens
Expunging a Lis Pendens
How to Remove a Lis Pendens in Texas: Expungement Process It can be done in two main ways:
Court Order
If the lawsuit is dismissed or the lis pendens is found to be invalid, the court may enter a removal order to strike it from the public record.
Settlement
A settlement of the underlying lawsuit can also have the effect of removing the lis pendens. After the dispute is settled the plaintiff usually cancels the notice.
Do’s and Don’ts When Handling Lis Pendens
Understanding Lis Pendens in Texas
A lis pendens can definitely be troublesome but there are ways you can attempt to reduce its negative effects:
For Property Owners
Seek Legal Counsel: An experienced real estate attorney can evaluate the lis pendens and determine whether to consider removal.
Settle the Dispute: Whenever possible, negotiate with the opponent to settle the suit quickly and with no bad blood.
For Buyers and Lenders
Do Your Due Diligence: Before you acquire or finance any property, make sure you run a complete title search to see if there are any filings of lis pendens.
Stay Away From High-Risk Transactions: Do not enter into the acquisition of property subject to an active lis pendens unless clearly understood the legal risk.
Conclusion
In Texas real estate, a lis pendens can have significant ramifications for property owners, buyers, and lenders. While acting as the public notice of impending litigation, it keeps transparency but creates serious legal and financial problems. Filing is a very technical issue and knowing the implications and ways to remove one is the key to this legal battle.
If you have a lis pendens recorded on your property in Texas, always consult an experienced real estate attorney for guidance through the process. If you know how to handle it, you can avoid the damage and cover your interests.
You may also read(what does reo mean in the stock market)
