Florida Lis Pendens & Foreclosure Risk
Buying a distressed property in Florida can look like a shortcut to a good deal. The price is low, the seller is motivated, and the numbers make sense. However, there is a hidden aspect that many buyers miss. The property might already be involved in active litigation through something called a lis pendens. Once a lis pendens is recorded, the deal is no longer just about real estate. It also carries legal risk. A recent Florida case, U.S. Bancorp v. Taharra Assets 5545, Inc., shows exactly how that plays out when buyers step into the middle of ongoing litigation without realizing it.
What a Lis Pendens Means
A lis pendens is a public notice that a lawsuit involving a specific property is ongoing. In a foreclosure case, it signals that ownership and title are being challenged in court. The effect of this is that if you go ahead and purchase the said property after the lis pendens has been recorded, you take the property subject to whatever the court later decides.
What Happened in U.S. Bancorp v. Taharra Assets?
The dispute in this case involved a foreclosure situation that became complicated because of overlapping claims and timing. A property was tied to a mortgage foreclosure action, and a lis pendens was recorded as part of the process. With litigation still active, ownership transferred through a shift of transactions, including a quitclaim transfer to Taharra Assets. The mortgage lender, U.S. Bancorp, continued pursuing foreclosure and ultimately obtained a foreclosure judgment and purchased the property at the sale. The dispute shifted into a quiet title action where Taharra challenged the bank’s claim, arguing that there were procedural mistakes that made the foreclosure judgement defective.
The court began by recognizing that Taharra and Jasco Construction Company, from whom Taharra had acquired title to the property, were third-party purchasers, meaning Taharra acquired the property subject to the foreclosure. Therefore, the court granted Taharra’s motion for summary judgement, noting that the bank forced a cloud on Taharra’s title.
The appellate court reviewed the trial court’s decision, affirming that the summary judgment is appropriate when there’s no genuine dispute regarding material facts. A critical aspect in the appellate court’s ruling was the determination that the bank’s decision to drop Jasco from the foreclosure proceeding made the foreclosure ineffective against Taharra’s interests in the property. Why? Because Jasco was an indispensable party to the foreclosure action, and without Jasco’s involvement, the bank could not enforce its mortgage against Taharra.
While a procedural issue decides the outcome of this case, the takeaway here is that if you buy property after a lis pendens is recorded, your rights are linked to the outcome of the lawsuit in progress. That means:
- You inherit legal risk
- You don’t override existing litigation
- You cannot assume ownership is clear just because a deed transfers
Before buying any distressed or foreclosure-related property, due diligence should go beyond the listing price and physical condition. You should also check public records for any lis pendens filing, review ongoing foreclosure or quiet title actions, and have a real estate attorney evaluate litigation risk.
Contact a Miami Real Estate Litigation Lawyer Today
If you are considering buying a distressed or foreclosure property in Florida, contact our Miami real estate litigation lawyer today at Valero Law by calling 305-607-7011 for a comprehensive review of records and assessment of litigation risk before you commit. We serve clients in Davie, Broward County, Coconut Grove, and Miami-Dade County.
Source:
scholar.google.com/scholar_case?case=2795806859560958718&q=U.S.+Bancorp+v.+Taharra+Assets+5545,+Inc.+(Fla.+4th+DCA,+2024)&hl=en&as_sdt=4,10
