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Learn the New York Foreclosure Processes:

Step 1: Lis Pendens Filing: The Case Begins.

A lis pendens is the first filing made during the foreclosure process. Barron’s Dictionary of Real Estate Terms defines Lis Pendens as Latin for "suit pending".

Lis Pendens filings are made against properties for various reasons. For instance, a contractor who has not been paid for his/her work may file a Lis Pendens known as a mechanic’s lien. This is done to protect the contractor and prevents the homeowner from selling the property without paying the contractor for their work.

Real estate investors focus almost exclusively on three types of Lis Pendens filings: Notice of Mortgage Default, Property Tax Delinquency and Unpaid Common Charges. Properties with these types of Lis Pendens filed against them are often referred to as "Pre-Foreclosures".

Lis Pendens for Mortgage Default: After a mortgage has gone unpaid for 3 consecutive months, the lender (Plaintiff) files a lis pendens and the mortgagor (Defendant) is served with a summons and complaint. In simple language, the mortgage holder (now the Plaintiff in the action) sues the borrower (now the Defendant in the action) for non-payment of the mortgage.

Lis Pendens for Property Tax Delinquency: When someone does not pay their property taxes for one year, a Tax Lien is filed against the property by the City of New York. Just as with a mortgage default, a summons and complaint is served. The City of New York sues the property owner for non-payment of property taxes.

Lis Pendens for Unpaid Common Charges: When someone does not pay their condominium common charges, a lis pendens is filed against the property by the condominium association. Just as with with other lis pendens filings, a summons and complaint is served. The Condominium Association (Plaintiff) sues the individual Condominium Unit Owner (Defendant) for failing to pay their common charges.

Making Your Move:

So you’ve found a property with a Lis Pendens filed against it that you want to pursue…now what? When a property is in the lis pendens, or "pre-foreclosure" stage, it gives you a unique opportunity to approach motivated property owners or the Plaintiff’s attorney BEFORE the property reaches the auction block. Often this can be accomplished with little cash outlay by taking over an existing mortgage or paying the tax delinquency.

Every investor in a Lis Pendens stage property takes an individual approach . Real estate brokers will find leads to potential new listings of property owners looking for a quick sale; lenders will find property owners who may need to refinance their existing mortgage and get out of debt; investors will find properties below market value before they reach the auction block with adequate time to inspect the properties; and credit repair companies will find new clients in immediate need of their services.

Keep in mind that you may very well represent the troubled property owner’s only opportunity to satisfy their mortgage loan and preserve their credit. Also, by dealing directly with the property’s owner or the Plaintiff’s attorney, you have the time and opportunity to thoroughly examine the condition of the property.

 

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