If you’re facing foreclosure, you may be wondering if filing a lis pendens can help. A lis pendens is a formal notice of a pending lawsuit and it’s often used in real estate dispute cases. So does a lis pendens stop foreclosure? In this guide, we’ll cover how a lis pendens works, when it can be used to delay foreclosure proceedings, and the risks associated with filing one.
What is a Lis Pendens?
A lis pendens is a formal notice of a pending lawsuit that involves real estate. It’s most often used in disputes over mortgages, ownership, and other title issues. Once a lis pendens has been filed with the county recorder’s office, it serves as public notice of an unresolved dispute or claim on the property – letting future buyers know there might be problems with the title.
In Arizona, the process of recording a lis pendens is governed by A.R.S. Section 12-1191.
Does a Lis Pendens Stop Foreclosure?
While a lis pendens can stop foreclosure in some cases, it is important to understand that there are certain limitations. A lis pendens does not stay court proceedings indefinitely and lenders can still move forward with foreclosure if they choose to do so. Furthermore, a lis pendens does not give borrowers additional time beyond what their original loan documents provide for. Therefore, it is important for homeowners facing foreclosure to take any available measures to resolve their financial issues in order to prevent or stop foreclosure from going forward.
In Arizona, a lis pendens does not automatically stop a Trustee Sale or foreclosure. The foreclosure process in Arizona is governed by state law and requires specific actions to be taken by the homeowner or their legal representative in order to halt the foreclosure. The same goes for a Trustee Sale (which is more common in Arizona). These actions may include filing for bankruptcy, negotiating a loan modification, or obtaining a temporary restraining order.
How Does a Lis Pendens Work?
A lis pendens can stop foreclosures in certain cases. When a lis pendens is recorded, it puts lenders and other potential buyers on notice that there is an unresolved dispute or claim on the property, which may affect their ability to purchase the property or may require additional research before closing a sale. In many cases, this pause will give homeowners time to try to resolve their financial issues and avoid foreclosure.
Warning: Sanctions for Recording Groundless Lis Pendens.
In Arizona, if you record a Notice of Lis Pendens is in violation of the law, A.R.S. § 33-420 imposes severe penalties, which may include treble (three times) the owner’s actual damages or statutory damages of $5,000 (whichever is greater), as well as attorneys’ fees. Here is what the statute says:
A person purporting to claim an interest in, or a lien or encumbrance against, real property, who causes a document asserting such claim to be recorded in the office of the county recorder, knowing or having reason to know that the document is forged, groundless, contains a material misstatement or false claim or is otherwise invalid is liable to the owner or beneficial title holder of the real property for the sum of not less than five thousand dollars, or for treble the actual damages caused by the recording, whichever is greater, and reasonable attorney fees and costs of the action.
In such cases, an owner (or the bank trying to foreclose on your property) who believes that a Notice of Lis Pendens has been wrongfully recorded may file an action to cancel the Notice and obtain clear title to the property. They would probably also seek to have the court impose penalties against you if you violated the statute above.
Other Actions to Protect Your Home From Foreclosure.
There are other actions that you can take to protect yourself and your home from foreclosure. The most important step is to create a realistic budget and contact your lender as soon as you realize you may not be able to make your loan payments. Other steps include speaking with a HUD-approved housing counselor, enrolling in a mortgage assistance program, considering loan modification options, or filing for bankruptcy, if necessary. All of these measures can help protect your home from foreclosure.
Facing a Foreclosure or Trustee Sale in Arizona? Call us.