Motivated Seller With Lawsuit
I have motivated seller who has a lis pendens on title on her property. I asked my lender whether I could get financing and the lender said until I have clean title I couldn't get a loan. The seller is willing to finance or do a lease option. If I buy the property would the lawsuit follow the person and not the property? I wouldn't even consider this unless if it weren't such a deal. Any advice? 
speak with a short term hard money lender
i assume the lis pendens is because she has not paid her mortgage..if she sells to you and the mortgage gets paid the lis pendens will be removed by the foreclosing bank attorney. here is how it works: the title company at the closing table will make sure that the outstanding mortgage will be paid by the closing proceeds and in turn once the attorneys for the bank receive payment they will file a motion with the court to discontinue the lis pendens. The title company will insure you and you lender for that. if you want to do a lease option you have to make sure that the bank will reinstate the loan and discontinue the lis pendens. if she willing to finance your purchase then again the loan would either to be reinstated or paid off to avoid a foreclosure.[ Edited by lp1 on Date 09/29/2003 ]
Find out what the Lis Pendens is for. The most common type is a foreclosure but it can be for a number of other reasons.
Quite simply, this puts everyone on notice that there is a lawsuit pending and that depending on the outcome of the trial any interested party will/may be affected by the outcome and will have to abide by the outcome..
A Lis Pendens will attach to the property. It clouds title and you would not be able to get financing. I don't even think that a hard money lender would loan against the property until the lis pendens is removed.
I concur with the previous recommendations. Make sure you get a title search to identify any other encumbrances on the property.
financing can be obtained, subject to gettting the lis pendens removed, which happens at the closing table. Attorney for bank will give a performance letter that (they will file the appropriate paperwork )to the title company and then in turn the title company will insure the title for the lender and the borrower..again assuming the lis pendens is because of the foreclosure action.
The lis pendens is not for a foreclosure. Apparently, a business associate of the present seller helped in the initial purchase of the property by providing part of the down payment in exchange for business services. It was a verbal agreement and the individual who helped provide the down payment does not have his/her name on the deed or a mechanics lien and is upset about the business arrangement falling through. Anyway, a messy situation to be worked out in court. I'm not sure of the specifics since I'm only hearing the seller's side.
Thanks for all of your advice. I did talk with a lawer who suggested an option on it with a lease to buy with the proceeds going toward a down payment/equity in the property. He suggested recording the option agreement. Does anyone think this will harm or hurt the court case -- let's say if the court suggests they sell the property and split the proceeds?
if you do a lease option all money should go into an escrow account. once the mess with the former business partner gets resolved then the money can be released. if it turns out that the lawsuit would be a detriment to you then all money will be returned to you...get an attorney involved to help you plan this the right way that way you dont get screwed. [ Edited by lp1 on Date 10/02/2003 ]