Legal Q&A: Lis Pendens

Q: A husband owns the house in his own name and is in the process of getting a divorce. He signed a listing agreement with me, but the wife’s attorney just filed a “lis pendens” on the DC land records. The husband claims that the judge may rule on removing the lis pendens shortly. What is a “lis pendens” is and what impact this will have on the listing?

A: “Lis pendens” is a legal concept that means “suit pending.” Once such a document is recorded, it puts the entire world on notice of a “cloud” on title. Until the lis pendens is removed, either by court order or by mutual agreement between husband and wife, it will prevent anyone from going to settlement. If you are satisfied that only the husband owns the property, you certainly can continue to market it, but must (repeat MUST) advise potential purchasers of the situation. While a judge may rule on removing the lis pendens shortly, in my experience it may take months before there is a ruling. The court will most likely want to set up a hearing.

Q: I am the listing agent for an estate. A purchaser came forward and signed a contract. A copy of the deposit was received, but no one has a record of actually receiving the deposit check. On the fourth day of the contract, I called the purchaser to discuss the expiration of the contract. During the conversation, I learned that the purchaser filed a lis pendens against the property, and would not sign a release. The Purchaser said that he would “go forward” with the purchase if $xx was taken off the selling price. Because of the lis pendens, I cannot offer the property for sale at this point. What are my options?

A: Is the estate is represented by counsel? If so, the attorney should immediately get involved. If not, the Personal Representative should consider hiring an attorney to protect the assets of the estate. You are correct in that the lis pendens puts a cloud on title and a hold on your ability to go to closing.

Do you know of any reason why the purchaser now wants to reduce the price? Was the contract signed by buyer and seller and did the seller have the authority (i.e. did the probate court have to approve of the contract?) From what you have told me, I think the buyer is in default and has prematurely breached his contract. You should insist that the buyer produce proof that the earnest money deposit was, in fact, deposited somewhere. (The contract should state who is to deposit.) Bottom line: this is obviously getting legal and the estate should have their attorney get involved.