Lis Pendens revealed in PSA negotiation...options?

[Greg Scully]

We're negotiating a PSA on a multifamily property in Tennessee.  The seller has disclosed a pending lawsuit against the Trust that owns the property stemming from a fall that resulted in injury.  Potential lenders have already stated that this would need to be resolved prior to closing.  My initial research shows that pending litigation does not necessarily mean the seller CANNOT sell the property, but it may make it more difficult.  

Can anyone share strategies for buying a property where legal action is pending against the owner?

[Patrick M Nichols]

I am not a Tennessee attorney, but I can explain in general:

A lis pendens is a cloud on marketable title. As long as it remains attached to the property, the seller cannot deliver marketable title. Because it is a known issue, you'll likely have problems getting title insurance because those proceedings could alter the title in unforeseeable ways.

I would move on.