What is a Lis Pendens Release?
A lis pendens release is a recorded document that removes a lis pendens (notice of pending litigation) from a property's title records. A lis pendens is filed when someone has a legal claim involving the property — typically a dispute over ownership, a foreclosure action, a mechanic's lien dispute, or a partition action. The lis pendens puts the world on notice that the property is subject to litigation, which effectively clouds the title and prevents or severely complicates any sale or refinancing until the lis pendens is released.
For real estate investors, lis pendens are both obstacles and opportunities. A property with a lis pendens is difficult to sell or finance, which motivates owners to accept discounted offers. But purchasing a property with an active lis pendens carries risk because the outcome of the litigation could affect your ownership rights.
How a lis pendens gets released
A lis pendens can be released through several mechanisms:
Voluntary release: The party who filed the lis pendens records a release (also called a withdrawal or cancellation) with the county recorder's office. This typically happens when the underlying dispute is settled, the lawsuit is dismissed, or the filing party decides to drop their claim. The release must be recorded in the same county where the lis pendens was filed.
Court-ordered release (expungement): The property owner petitions the court to expunge (remove) the lis pendens. The court evaluates whether the underlying lawsuit involves a real property claim and whether the claimant can demonstrate a probable likelihood of success. If the court determines the lis pendens was improperly filed or the claimant's case is weak, it can order the lis pendens expunged. The standard for expungement varies by state.
Case resolution: When the underlying lawsuit is resolved — through judgment, settlement, or dismissal — the lis pendens is typically released as part of the resolution. If the case is resolved in favor of the property owner, the lis pendens is released. If it's resolved in favor of the claimant, the property may transfer or be encumbered as the court directs.
Impact on real estate transactions
A lis pendens effectively freezes a property's marketability. Title companies will not issue title insurance on a property with an active lis pendens because the outcome of the litigation could result in someone else having a claim to the property. Without title insurance, most buyers can't get financing, and most informed cash buyers won't proceed.
This creates motivation for sellers. A property owner with a lis pendens on their title is stuck — they can't sell, can't refinance, and may be incurring legal costs to fight the underlying lawsuit. This motivation can lead to discounted sales if the lis pendens can be resolved as part of the transaction. An investor who can negotiate a release of the lis pendens as a condition of closing may acquire the property at a significant discount.
Due diligence with lis pendens
When a title search reveals a lis pendens, investigate the underlying lawsuit before proceeding. Review the court filing to understand: who filed it and why, what the claim involves, how long it's been pending, whether it involves a legitimate ownership dispute or a frivolous claim, and what it would take to resolve it. Some lis pendens are filed as negotiating tactics (a contractor who wasn't paid files to pressure the owner) and can be resolved for a modest payment. Others involve genuine ownership disputes that could take years to litigate.
Work with a real estate attorney to evaluate the risk before purchasing any property with an active or recently released lis pendens. Even after release, verify that the underlying dispute is fully resolved and that the release was properly recorded.