If you're seeking to invest in a New York property that's going into foreclosure, a term you need to know is "lis pendens." For people who don't deal with Latin every day, that means "suit pending." It's the first filing in the foreclosure process. It's also known as a "pre-foreclosure."
If you find a property that you're interested in that's in lis pendens, you may find an owner who's highly motivated to sell in order to preserve his or her credit. The attorney for the plaintiff who filed the lis pendens may also be motivated to sell it before it goes up for auction.
By getting to a property before it goes into foreclosure and is auctioned off and by dealing with the property owner or plaintiff's attorney directly, an investor generally has a better chance to thoroughly inspect the condition of the property. Many investors are able to purchase lis pendens properties by paying the tax delinquency or taking over the mortgage -- both of which help out the current property owner.
That brings us to the different reasons for lis pendens filings. Most New York City real estate investors focus on three in particular:
-- Property tax delinquency: If a property owner has failed to pay property taxes for a year, the state can file a tax lien against the property and sue the owner.-- Mortgage default: If a property owner is three months behind on the mortgage, the lender can sue that person for non-payment.
-- Unpaid common charges: If the owner of a condominium unit has failed to pay the common charges (widely known as homeowners association or condominium association fees that go toward the upkeep of the common areas) , the association can sue the owner of the unit.
If you are considering purchasing a property that is in lis pendens, an experienced New York City real estate attorney can work to help you ensure that the transaction is handled according to the laws of the city and state. This can help you prevent unnecessary headaches and expenses down the road.
Source: NYForeclosures.com, "Learn the New York Foreclosure Processes," accessed June 23, 2016