Lis Pendens Filed Two Days Before Closing – Lack of Due Diligence by Title Company?

[Joseph Kirk]

Hey everyone,

I’m dealing with a frustrating situation and wanted to see if anyone else has experienced something similar.

I was set to close on an off market purchase in two days, but I just found out that the mortgage company filed a Lis Pendens, meaning the foreclosure process has started because the seller hasn’t been paying their mortgage. The title agent has now reahced out to their attorney who will reach out to the foreclosure attorney to get a payoff amount and approval for the sale, but this "could take up to 10 days."

What I don’t understand is how something like this happens so late in the process. I thought everything was clear, and I was under the impression that title searches should uncover any issues like this well in advance. I asked the title agent, and they just said, “Unfortunately, it can happen.”

Has anyone had a deal get delayed like this? Shouldn’t the title company have caught this earlier? Was there a lack of due diligence on their part, or is this just an unavoidable situation? Will it actually only take 10 days, or potentially month(s)?

Appreciate any insight!

[Ken M.]

Quote from @Joseph Kirk:

Hey everyone,

I’m dealing with a frustrating situation and wanted to see if anyone else has experienced something similar.

I was set to close on an off market purchase in two days, but I just found out that the mortgage company filed a Lis Pendens, meaning the foreclosure process has started because the seller hasn’t been paying their mortgage. The title agent has now reahced out to their attorney who will reach out to the foreclosure attorney to get a payoff amount and approval for the sale, but this "could take up to 10 days."

What I don’t understand is how something like this happens so late in the process. I thought everything was clear, and I was under the impression that title searches should uncover any issues like this well in advance. I asked the title agent, and they just said, “Unfortunately, it can happen.”

Has anyone had a deal get delayed like this? Shouldn’t the title company have caught this earlier? Was there a lack of due diligence on their part, or is this just an unavoidable situation? Will it actually only take 10 days, or potentially month(s)?

Appreciate any insight!

The Title company has no way of knowing in advance if a Lis pendens will be filed. They can only respond to what has already happened. You must have known the property was in arrears, so it becomes your duty to be in contact with the bank through the process. Your agent or you should have been in constant communication with the seller since an action like this is preceeded with several notices. There was no communication, so the bank did the only logical thing.