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What Are Lis Pendens and Why Are They Important to Your Property Searches?

Posted on 02/16/2014 by Erik Wind

Whether you are new to real estate or a battle-hardened professional, you likely know that there’s an opportunity to make money working with distressed properties. If you have the skills and/or nerve to take on these kinds of properties, you may be able to turn a profit in this sector as an investor, agent, appraiser, lender, or through some other angle.

With this in mind, GeoData provides customers with information on distressed properties in the form of lis pendens. The term “lis pendens” is used frequently, sometimes without a full understanding, so we wanted to provide readers with a handy lis pendens primer. By no means is this post a complete guide to lis pendens — in fact, feel free to add your own comments and insight below if you think they’ll help other readers.

What is a lis pendens?

The term is latin in origin, loosely translating “suit pending,” or pending legal action. When it comes to real property, a lis pendens is often filed by a mortgage lender when a borrower is no longer making payments.

Is this like a 30, 60, or 90-day lateness on a credit report?

Not really. While both deal with late payments, a lis pendens doesn’t inherently tell you how late a borrower is, it just means the borrower is late on their payments. A 30/60/90 is credit matter, whereas a lis pendens is a legal matter.

How long does a lender wait before filing a lis pendens?

There’s no set number of months a borrower needs to be late before a lis pendens is filed. It’s up to the individual lender to file a lis pendens.

Why is information about lis pendens so important?

Since a lis pendens is a matter of public record, it’s the first notice to the world that this property may be facing foreclosure. Having this information is useful to a potential buyer since it may either discourage them from purchasing the property or use the information to negotiate a price below market value.

How does GeoData Direct incorporate lis pendens?

It’s done two ways. GeoData has a lis pendens search for Nassau, Suffolk, and the five boroughs of New York City (Queens, Brooklyn, Bronx, Manhattan, and Staten Island). You can search for lis pendens by date, neighborhood, and building classification. You can even view lis pendens on our maps.

GeoData also alerts you if a specific property has a lis pendens on it when you bring up the individual property report.

How far back can I search for a lis pendens in GeoData Direct?

As far back as you’d like. Recently, a customer told me that he had been using another service prior to signing on with us and he was only able to search back one year. That was surprising to me, especially in this climate where a property can take much longer than a single year to foreclose.

How do I take advantage of a lis pendens?

That depends on what you’re trying to do. An investor is going to want to try to get in touch with the owner in an effort to buy the property. A real estate agent will also try to contact the owner but in an effort to list the property or introduce them to a buyer. If the amount of the mortgage is more than what the property will sell for, you’ll need to negotiate a short sale with the bank.

What’s a short sale?

In summary, a short sale occurs when a property sells for less than the sum of the mortgage balances. You’ll often need lender approval to complete a short sale.

How does an appraiser benefit from seeing lis pendens?

Here’s one example: an appraiser will receive an assignment to appraise a home for the purpose of a mortgage. The client (in this case the mortgage lender or appraisal management company) may not know the property is facing foreclosure. When the appraiser looks up the property in GeoData, he or she will see the lis pendens and be able to share it with the client. This can save their client a great deal of time, money, and trouble, making the appraiser look like a hero.

Regardless of your real estate profession, the distressed real estate market has been around for a number of years and has continued to play a significant part in the real estate economy despite every prediction to the contrary. Whether you’re actively pursuing these types of properties or not, this is information you really need to know and GeoData Direct makes this readily available for properties in Long Island and New York City.

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