Knowing Your Legal Recourse in a Seller’s Market
It’s no secret that Nashville’s real estate market is on fire, burning hot, and showing no signs of cooling in the near future. Finding the perfect house in the right neighborhood for a nice price is a tall order. According to an article published on July 15, 2016 in the Tennessean, “The median price for a single family home rose more than $20,000 in the past year. The price was $260,148 in June. A year ago, the median price was $240,000, according to the Greater Nashville Association of Realtors.”
That’s a lot of money on the line. Not only that, but the emotional costs can be just as high. Potential home owners, many of them first-time buyers, often look for months to find the right fit. As rents continue to rise across the region, buyers ranging from first-time Gen X and Millennials to older buyers looking for the convenience of Nashville’s hottest neighborhoods to investors hoping to join the Airbnb or rental revolution are all competing over a limited pool of coveted properties.
After enduring dozens of open houses and the surviving the agony of the bidding process, it’s a relief to hear the wonderful words from your realtor: “The seller has accepted your offer.”
All of these financial and emotional costs, however, are great reasons to know your rights and to understand the ways in which a real estate lawyer can support you and your realtor throughout the closing process.
Understanding the Power of a Lien Lis Pendens
While 2016 is a great time to be selling property in Nashville, it can be an intimidating time for buyers.
Once the seller has signed on the dotted line, buyers can breathe a little more easily. The deal is sealed. Mostly. Occasionally, the worst case scenario comes to pass: the seller changes his or her mind. Whether the seller is suffering from a case of cold feet, are unhappy with repair costs, were seduced by the possibility of a better offer, or their life plans changed.
In the event your seller decides to intentionally breach the purchase and sale agreement by intentionally refusing to sell the home, consulting with a real estate attorney is critical. Rather than filing an emergency restraining order or seeking emergency injunctive relief -- both of which would be costly and there’s no guarantee that a Tennessee judge would grant the emergency motion -- buyers should consider filing a formal complaint and a lien lis pendens.
What is a lien lis pendens?
On the most basic of level, it’s Latin for “pending lawsuit.” When applied to a piece of property, it generally means that a plaintiff (often the buyer) is filing a complaint against the defendant (often the seller). Effectively, it means that the complaint and the plaintiff’s demands are recorded against the property’s title.
What information needs to be included in a lis pendens?
According to the Tennessee State Courts: “A lien lis pendens applies only to realty that is the subject matter of a lawsuit and described in the complaint. To affect the rights of bona fide purchasers and encumbrancers, an abstract must be registered in the register’s office of the county where the realty is located. The abstract must identify the court and contain names of parties to the action and a description of the realty and its ownership.”
Does a lien lis pendens prevent the sale of a property?
Technically, it does not. However, very few potential buyers are willing to purchase a property with a cloudy title, as they would be bound by the outcome of the pending lawsuit. In other words, let’s say that Buyer B decided to purchase the property from the Seller, even though the property’s title clearly showed a lien lis pendens which indicated the property reverts to Buyer A, should the courts side with the plaintiff. Buyer B would have to relinquish the property to Buyer A and attempt to get his or her money back from the original seller.
If you are a concerned home buyer in Nashville and need legal support and advice, contact Rochford Lawyers to schedule a consultation.
