Title complications can make the home selling process more difficult than usual. That said, it doesn’t make the sale impossible. Can you sell a house with a pending lawsuit on its title?
Our team at Sell Pittsburgh Now, LLC helps Pennsylvanians sell their houses fast in Pittsburgh by buying them in as-is condition. We’ve dealt with our fair share of homes with a lis pendens.
Defining Lis Pendens
“Lis pendens” is Latin for “suit pending.” This legal term indicates that a formal notice of a pending lawsuit has been filed on a property. It tells potential buyers that someone is disputing the property’s ownership.
Someone may file a lis pendens on a property for several reasons, including:
- Inheritance disputes
- Unpaid HOA invoices
- Unpaid property taxes
- Mortgage-related foreclosure
- Ownership dispute during a divorce
You can find out if a property has a lis pendens by searching the county clerk or recorder’s office. You can also contact a title company and request a title search, or ask your real estate agent to help.
What Pending Litigation Means for Potential Buyers
As the seller, you may already be aware of the in-progress lawsuit. Can you sell a house with a pending lawsuit if it could affect the buyer?
A lis pendens isn’t a lien (required payment) and doesn’t stop you from selling the property. However, it’s a red flag for everyone else.
Title Problems
Title insurance providers generally refuse to give insurance for houses with unclear titles. Even if the buyer wants the property, they may not be able to get the required insurance.
The only way to still get title insurance is if the company allows for an exception. This exception usually means they may no longer cover the property, depending on the lawsuit’s results.
Funding Issues
Mortgage lenders generally won’t approve loans unless the buyer has a clear title. Even if the title company gives the buyer insurance with exceptions, banks don’t want the unnecessary risk.
Potential Loss of Ownership
Let’s say a buyer manages to get partial title insurance and pay for the house with their own money. What about the lawsuit results?
If the plaintiff who filed the lawsuit wins, the ruling restricts the new owner. For example, the court could order that the title belongs to the plaintiff, regardless of the new owner’s purchase. Not only do they lose their money, but they lose their new house, too.
Be transparent if you know there’s a lis pendens on your property. It’s part of your seller obligations for real estate disclosure statements.
How To Easily Sell Your Property
Considering the negative publicity, can you sell a house with a pending lawsuit? While most buyers would flee upon realizing there’s a lis pendens, we don’t.
Sell Pittsburgh Now, LLC buys houses in any condition, whether there’s a pending lawsuit, foundation damage, or squatters. Our team has the time, money, and network to meaningfully resolve title complications on our end, taking the stress off the seller.
For help finding the right time to sell, or assistance getting rid of a property fast, call (412) 275-5238 today.