Lis Pendens NJ – Gold Mine for Short Sales

What is a Lis Pendens?

A lis pendens is a legal term that gets tossed around frequently when speaking about foreclosures. But what exactly does it mean and how does it fit into the foreclosure process?

When a property owner misses a mortgage payment, the lender starts contacting the homeowner, reminding them to get current on their mortgage. In New Jersey, once the homeowner misses about three consecutive mortgage payments and a resolution cannot be reached between the two parties, the lender will file an official document with the county clerk that will cloud the property’s title and formally begin the foreclosure process. This document is called a notice of lis pendens.    

Lis Pendens Definition

“Lis pendens” is a Latin phrase that simply means “lawsuit pending.” Although it can refer to different types of pending lawsuits, “lis pendens” is typically synonymous with “mortgage lis pendens” in real estate.  It is a lien filed by the lender indicating that money is owed.  The document includes information on the property, owner, original mortgage, and lender, so that anyone who is investigating the property for the purpose of purchasing it, providing another loan, or any other reason, can see that the property does not have clear title.

What Does Lis Pendens Mean to Homeowners

As it relates to the legal foreclosure process, a lis pendens officially initiates the pre-foreclosure stage. At this stage, the homeowner still has possession of the property but is aware that they will lose the property either through a foreclosure auction or sheriff sale if they do not get current on mortgage payments.   

What Does Lis Pendens Mean to Investors

Lis pendens NJ are excellent leads for real estate investors. To begin with, an owner facing impending foreclosure is left with very few options and may be willing to sell the property for significantly less than its market value in order to avoid foreclosure.  If there is no equity in the property, then it may a perfect candidate for a short sale.

Given the situation, the homeowner is generally motivated to sell. If the property is purchased by a third party or repossessed by the bank at the sheriff sale, the homeowner will not only lose their home but may also get served with a deficiency judgment. This amounts to the difference between the mortgage balance and the winning auction bid.  However, if the homeowner and bank are willing to do a short sale, the deficiency judgment can often be negotiated down to zero.

The competition in buying pre-foreclosure properties is also relatively small, especially when the houses have not listed with a real estate broker.

Investors and realtors can sign up for Realty Robot membership today to receive weekly pre-foreclosure listings in NJ.  Realty Robot offers a premium membership for more serious real estate investors and a free membership for beginners.

Common misspellings include: Lis Penden, Lis Pendis, Lis Pendes, Les Pendens