Pre Judgment Lis Pendens

A Lis Pendens is a powerful legal document that can be filed if there is a lawsuit in progress relating to a real estate ownership claims. This article is my opinion and is not, legal advice. I'm a judgment broker, and not an attorney. If you ever want a strategy to use or legal advice, you should contact a lawyer.

When there is proof that a debtor's real property recently has been fraudulently transferred, the creditor might choose to file a third-party lawsuit charging fraudulent transfer, to try to undo the transfer. After this kind of lawsuit gets served, certain creditors (or more likely their attorneys) record and file a Lis Pendens filing with the county recorder. In most situations and states, such a recording will temporarily cloud the title to that property, which should stop it from being sold.

Not every suspected fraudulent transfer can be proven at court to be a fraudulent transfer. If a judgment debtor's real estate was previously sold with full consideration paid, and in good faith; the sale is not going to be judged a fraudulent transfer. Discovering where the funds from this kind of valid judgment debtor sale went, may be useful to the judgment owner.

Due to ownership variables and laws, sometimes filing a Lis Pendens does not tie up the debtor's property. Before you start to get and file your Lis Pendens, order a copy of the Grant Deed; and check the way the property is held, and by whom. Order certified copies of the Grant and trust deeds and anything else that shows any property ownership changes.

Armed with the proper proof and knowledge, if you find some monkey business that leads to a fraudulent transfer; you will know better which person you may decide to sue with a third-party creditor's fraudulent transfer lawsuit. When you win such a lawsuit, it might make sense to force a sale of that property. Keep the 90-day bankruptcy preference time rule in mind.

Some monkey business is sometimes legal, or requires a lawsuit to attempt to set aside. A lot depends on the way your judgment debtors and non-judgment debtors are titled on the property. In the majority of states, title held by "joint tenancy" or some similar title, means that when two parties are on the title, each party owns one half of that piece of real estate. In that situation, you could lien your debtor's ownership in the real estate. If the debtor sells that real estate, and when the lien is filed correctly, in the majority of situations and states, their title company should discover your lien.

It is common for debtors to take title to their property as "tenants by the entirety". In which case, that property ownership can't be split because each party owns one hundred percent of the property, and that is bad news for judgment owners. Certain debtors change from joint tenancy, to tenants by the entirety, during the lawsuit or after the judgment is entered. Switching property title types just to defeat judgment owners, is not usually legal. Usually, only a judgment owner may challenge such a change of title type, by paying for (a typically expensive) legal proceeding.

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