Legal Question in Real Estate Law in California

lis pendens- Am I able to still buy? What can happen?

There is a lawsuit pending on a property that I want to purchase. The probability is very low that the ruling will be in favor of the party that could effect my ownership of the home. Am I still able to purchase under these circumstances? Must I wait until the lawsuit has been decided? If I give the owner cash for the home and the court ruling determines that someone else owns the home, am I entitled to the cash that I paid?

Asked on 3/29/06, 8:53 pm

3 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: lis pendens- Am I able to still buy? What can happen?

You understand, of course, that "lis pendens" is legal Latin for "litigation pending." It's nothing more than a notice that the property is involved in litigation that affects the right to ownership or possession of the property. It does not legally prevent transactions involving the property. It does, however, cast a very deep shadow across the rights of anyone to sell, encumber or possess the property.

Further, if you have enough legal knowledge to decide that the probability is "very low" that the adverse party will prevail, howcome you have to ask this relatively simple question on LawGuru? Predicting the outcome of lawsuits affecting real-property rights is fraught with peril, as you can see by checking of WestLaw or Lexis-Nexis the number of Court of Appeal cases in which the terms "lis pendens" and "the judgment is reversed" both appear. Apparently, even trial judges don't always get it right!

I can't answer the question as to whether you would be entitled to "get your cash back." Giving a grant deed is considered to include the grantor's warranty of title. I think such a warranty might stand up even in the face of a lis pendens, but if this troubled owner has spent your cash and split for Khazakstan, how do you get it back after the unfavorable judgment?

One possibility you might consider is putting the cash in escrow, have the seller put a deed in escrow, with escrow to close upon a favorable (to you) outcome of the suit. The seller may not want to do this, or might charge you more, but the seller may understand the weaknesses of his case better than you do - and this is a way to call his bluff.

Buying properties that are discounted because of legal problems is a gamble or speculation where, in the long run, the winners will be those who know the law, study the facts, and assume the risks with more knowledge than the other players at the table, including both the defendant and the plaintiff and their legal counsel.

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Answered on 3/30/06, 3:22 am

Re: lis pendens- Am I able to still buy? What can happen?

You can still purchase, but there's no way you will get clear title, and you will very likely not be able to find a title company willing to insure title. Why would you want to but into this?

Absent a written agreement with the seller, you will not be entitled to a return of your money. More significantly, regardless of whether you have a written agreement, if the purchase money is not held and retained by an escrow holder, you will probably never see the money again (assuming you need to make demand to get your money back).

Good luck.

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Answered on 3/29/06, 9:00 pm
John Jay John W. Jay, Attorney at Law

Re: lis pendens- Am I able to still buy? What can happen?

While you can purchase the property, I would not recommend it for a number of reasons:

1. You risk losing the property if the party who is proceeding against it prevails.

2. You probably will not be able to obtain financing for the property.

3. You will not receive a refund of what you have paid if you lose the property.


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Answered on 3/29/06, 9:19 pm

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