I never took Latin in High School or College and I don’t regularly converse with Ancient Romans, but Latin terms seem to creep into my vocabulary whenever I am dealing with a foreclosure. Perhaps the most common term you will see in a foreclosure proceeding is the term “Lis Pendens”. What is a Lis Pendens anyway and what does it have to do with loan or real estate investment?
The term “Lis Pendens” is simplyLlatin for “Suit Pending” and it means exactly what its translation implies. A Lis Pendens is simply the formal notice that is filed with the courts in a Lien Theory (Judicial) State that formally gives notice to all that the lender is starting the foreclosure process. The process still has a long way to go, but the Lis Pendens is the first step. Deed Theory (Non-Judicial) States typically don’t involve the courts in the process, so foreclosures in those States will typically skip the Lis Pendens and simply send out a Notice of Default to the borrower.
During the start of a judicial foreclosure process, a complaint and a summons are served to the borrower/property owner while the Lis Pendens is filed at the courthouse. The Lis Pendens is filed to formally inform other lienholders, other buyers, and the public in general that a foreclosure suit is underway. Once this is filed, the borrower technically is now in foreclosure.
The term Lis Pendens sounds scary…and it can be to the party that stands to lose their property..but it’s actually a very simply legal document. It only means that the process has begun. A borrower that reacts quickly by retaining the services of a good debtor’s attorney can still work out a deal with the lender to stay in the home.