Can I sell a property I’m being sued for?

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Can I sell a property I’m being sued for?

I own a home and I’ve owned the property for almost 2 years. I just got done with a 3 month court battle to get squatters evicted out of my property. Now I’m finding out that the daughter of the previous owner is trying to file suit to get the house from me stating that I fraudulently obtained it by convincing the grandmother to sign it over. The daughter is in the process of trying to file for the administration rights through the estate to sue me for the property. Can I sell said property before the case is pending in court and not have it come back to bite me in the ass in other words meaning they can still sue me for the property and I have to pay the person back that bought it?

Asked on December 21, 2017 under Real Estate Law, Nevada

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You *may* sell it so long as they do not file a "lis pendens," which is a formal notice of a lawsuit affecting title which is filed with the county. A lis pendens puts buyers on notice that the title of the property is in dispute and that they could lose title if the court ultimately finds that your title was not valid or was subject to being voided. Technically, even with a lis pendens you *could* sell it if you could find a buyer willing to overlook the fact that he/she might lose the property in the future if the lawsuit goes against you, but clearly, unless you found a very stupid or naive buyer, that risk would very signficantly impact what they'd offer for the property. And note that you MUST disclose a lis pendens to potential buyers, so even if they and their title company somehow did not find it, you'd have to tell them--if you did not, you would have committed fraud and would be liable to the buyer for the money they paid for the property and any other costs they incurred.
Even if the would-be plaintiff (person who wants to sue you) does not file a lis pendens, if you sold the property for fair market value, if they win the lawsuit, they could get the proceeds from you (i.e. if they can't get the property itself, they get the money you received for it). And if you sold or otherwise transferred it for less than fair market value, that would be a transfer made to defraud a known or suspected creditor, and could be reversed under the Fraudulent Transfers Act--you can't "hide" assets from creditors or people suing you by transferring them to another. Selling before the case is filed will not help you, since you know or at least have reason to believe that someone intends to file a case: therefore, you are already on notice of the matter.
You therefore may wish to not sell until you resolve this matter.


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