Lis Pendens

Lis pendens — Latin for "suit pending" — is a formal notice filed in the county records to put the public on notice that a legal action involving a particular property is underway. Once recorded, the lis pendens effectively clouds the title, making it difficult or impossible for the property owner to sell or refinance until the underlying lawsuit is resolved.

In the secondary mortgage note market, a lis pendens most commonly appears in connection with a foreclosure action. When a note holder initiates judicial foreclosure, the filing of the complaint is typically accompanied by a lis pendens to prevent the borrower from transferring the property to a third party during the litigation. Investors evaluating a loan during due diligence should check county records for any existing lis pendens filings — their presence may indicate active litigation, disputed ownership, or competing claims that could affect the loan's value and the investor's ability to enforce it. A lis pendens filed by someone other than the current note holder is a red flag that warrants deeper investigation before proceeding with a purchase.