Yes, but with extra steps. A lis pendens is a recorded notice of pending litigation. It does not prevent a sale, but it creates a title issue the buyer must address and may affect financing.
A lis pendens (Latin for “suit pending”) is a recorded public notice that litigation is pending that may affect the title to a specific property. In a foreclosure context, the lender records a notice of pendency at the start of the foreclosure process to put potential buyers, lenders, and the public on notice that the property is subject to the foreclosure. The lis pendens does not by itself prevent the homeowner from selling. It does, however, create complications that affect how the sale is structured.
This post explains how a lis pendens works in a Minnesota foreclosure context, what it means for selling, and how the sale can still proceed in many cases.
What a Lis Pendens Is
In Minnesota, a lis pendens (or notice of pendency in the foreclosure context under Minn. Stat. § 580.032) is a recorded document that gives constructive notice to the world that litigation is pending against the property. The effect of recording:
- Anyone acquiring an interest in the property after the recording is considered to have notice of the litigation
- The pending litigation can affect title until resolved
- Buyers, title insurers, and lenders all see the lis pendens during their due diligence
In a foreclosure context, the notice of pendency signals that the foreclosure process has formally begun. Title searches will show it. Title insurance companies will require it to be addressed before issuing a clean title policy. Mortgage lenders considering financing the purchase will see it and adjust their approach.
Does It Prevent a Sale?
No, the lis pendens itself does not legally prevent a sale. The homeowner still owns the property (until the redemption period after a sheriff’s sale ends), and the homeowner can still transfer ownership through a sale. What the lis pendens does is signal to potential buyers and their professionals that the foreclosure is in progress and that the mortgage must be paid off at closing for the buyer to receive clean title.
For a sale that closes before the sheriff’s sale, the practical sequence is the same as any pre-foreclosure sale: the proceeds at closing pay off the mortgage, the lender releases the lien, and the foreclosure is dismissed. The lis pendens is removed once the underlying foreclosure is resolved. See selling your house before foreclosure in Minnesota for the general process.
How the Sale Actually Works With a Lis Pendens
Several practical considerations:
Title Insurance
The buyer’s title insurance company will require the lis pendens to be addressed before issuing a policy. This typically means having the mortgage paid off at closing (which clears the underlying foreclosure) and confirming with the foreclosing attorney that the foreclosure will be dismissed and the lis pendens released. A title officer experienced in foreclosure transactions can manage this through the closing.
Buyer Financing
Mortgage lenders financing the buyer’s purchase will see the lis pendens during their underwriting. Some lenders are comfortable with the situation as long as the foreclosing mortgage is being paid off at closing. Others may require additional documentation, a delay, or different loan terms. Cash buyers are often the simplest path because the buyer’s financing is not in the picture.
Lender Coordination
The foreclosing lender (or their attorney) needs to be in the loop. The lender’s payoff statement governs how much must be paid at closing to clear the mortgage and the foreclosure. The lender’s attorney is also typically the one who arranges to dismiss the foreclosure and release the lis pendens after the closing.
Pricing Strategy
Buyers aware of a lis pendens may price their offers slightly below market value to account for the additional complexity. A licensed broker familiar with foreclosure transactions can position the listing and the buyer pool to minimize this effect.
When a Lis Pendens Does Become a Problem
A few scenarios where the lis pendens creates more than a paperwork hurdle:
Multiple Lawsuits
If the property has more than one pending lawsuit (foreclosure plus a mechanic’s lien lawsuit, plus a divorce property division, etc.), each may create its own complications. Buyers may walk away from the situation rather than navigate multiple disputes.
Sale Proceeds Insufficient
If the sale proceeds will not cover the mortgage payoff (the home is underwater), a simple sale will not work, and a short sale becomes the path. The lis pendens does not change this calculation but does add documentation to the short-sale process.
Disputes Over the Foreclosure Itself
If the homeowner is actively contesting the foreclosure (alleging dual-tracking violations, procedural defects, or other issues), the litigation can complicate the sale because the lis pendens may not be removable quickly. This is a situation where an attorney’s coordination matters.
Common Questions
Will a buyer be willing to purchase with a lis pendens recorded?
Often yes, especially if the foreclosing mortgage is being paid off at closing and the title company is comfortable with the situation. Buyers’ real estate agents and attorneys educate buyers on what a foreclosure-related lis pendens means and how the closing resolves it. Cash buyers and investors are often the most comfortable; first-time financed buyers may be more cautious.
How is the lis pendens removed after the sale?
After the sale closes and the foreclosing mortgage is paid off, the foreclosing lender’s attorney files documents to dismiss the foreclosure and release the lis pendens. The title company confirms the release. The buyer’s title is then clear of the foreclosure-related encumbrance.
Can I sell during the redemption period if a lis pendens is still recorded?
Yes, in most cases. The lis pendens reflects the foreclosure that has already happened; selling during the redemption period pays off the certificate holder, releases the certificate, and resolves the underlying litigation. The sale process is similar to a pre-foreclosure sale, with adjustments for the post-sheriff’s-sale dynamics. See can you sell during the redemption period in Minnesota.
Does a lis pendens affect my credit?
Not directly, generally. Credit impact comes from the underlying default and any foreclosure event, not from the lis pendens itself. The lis pendens is a public record on title, not a credit reporting event.
A Clear Next Step
If you are facing foreclosure and a lis pendens has been recorded against your Minnesota property, selling is usually still possible with the right coordination. The first call walks through what your specific situation allows. Confidential, no fee, no obligation.
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