In order to fully grasp the sometimes alarming outcome of a foreclosure action when a lien holder violates the six (6) year statute of limitations governing such cases, it is important to understand why statutes of limitations are so prominent in real property actions. Although enacted by the legislator, as opposed to a derivative of the common law, statutes of limitations enforceable in real property actions have been codified since the Roman Empire. As far back as 1236, the English Common law, on which our American system of law is based, put temporal limitations on a claimant’s rights to bring a legal action to reclaim real property. The purpose behind such a limitations period was, and still is, twofold: Firstly, statutes of limitations are designed to promote a property holder’s peace of mind, for example, preventing him from being blindsided by an unexpected eviction action based on an event that occurred twenty years prior; secondly, it is intended to promote resolution of meritorious claims in a timely manner. Overall, land rights are some of the most highly protected rights in the American legal system, which is why New York State requires lenders to navigate a plethora of procedural barriers in foreclosure actions.
Pursuant to New York law, a foreclosure action must be commended in supreme court in the county in which the property is located “within six years.” The question then becomes, within six years of what? Generally, this means within six years of default on a payment or “acceleration” of the mortgage note, which occurs when the lender either “calls in the full debt” via letter or files a foreclosure action. In New York foreclosure actions, the statute of limitations is counted from the date of the triggering event. This means that an action for foreclosure based on non-payment of a mortgage installment on January 1, 2010 must be filed by January 1, 2016 or else it will be considered “time barred,” and the defaulting defendant can ask the court to dismiss the action. In the same vein, if a foreclosure action is filed by the lender on February 1, 2010 and later dismissed by the court because the lender failed to properly serve the borrower, the statute of limitations clock begins to run on February 1, 2010 and a new action must be filed before February 1, 2016.
If you believe an action for foreclosure is “time barred,” that is, filed after the statute of limitations has expired, you should contact a foreclosure attorney immediately, as it is possible to waive your defense under the statute of limitations if it is not raised in the early stages of litigation. Your attorney can answer the foreclosure complaint by stating in your answer that the action is time barred, file a motion to dismiss on that ground prior to answering the complaint, or in certain circumstances, file a motion for summary judgment that asks to the court to decide, as a matter of law, that the action is time barred.
Generally, the moving party, that is, the party asking the court to take action, has the burden of proving it is entitled to the relief it seeks. When a party, normally the borrower, moves to dismiss a foreclosure action because the statute of limitations has expired, it must show the following:
However, testimonial evidence, such as affidavits and deposition transcripts, including certain unofficial letters and notices from the lender, are generally not considered “documentary evidence” under New York law. The proof submitted on a motion to dismiss based on the statute of limitations must be absolute, and this is normally available in foreclosure cases as a defendant can meet its initial burden of proving the action is time barred by showing that the summons and complaint in the present action were filed six years after the mortgage was accelerated. If the lender cannot refute this evidence, the case will be dismissed as “time barred,” and the lender will not be able to bring another action under the same facts.
This is different than if an action is dismissed for another procedural reason, such as failure to properly serve the borrower, as in those cases, the lender may re-file the action. In the case of a successful statute of limitations defense, the action is dismissed “with prejudice,” meaning that the court rendered a decision on the merits of the action itself and it may not be re-filed.
If the court determines that a foreclosure action is “time barred,” then the borrower can file an action for “discharge” of payments due under the mortgage. This means exactly what is sounds like: if a lender previously accelerated the mortgage debt, meaning the lender declared the entire balance due, and the borrower successfully proves that the lender has violated the statute of limitations, then the borrower’s debt is completely discharged and cancelled. You take the real property debt free as if you had paid off the debt even if a balance remains. In Suffolk County alone, a borrower recently had a 2.4 million dollar debt discharged because the lender failed to abide by the statute of limitations. Although this may seem like a shocking result, it is important to remember the principles of American property law as set forth above: (1) you should not be blindsided by a legal action that could cost you your home six years after the mortgage was called in, and (2) in order to promote your peace of mind and judicial efficiency, the lender should have taken action to protect its rights within the reasonable period of time as codified by the statute of limitations.
The statute of limitations is more than simply a “defense” to a foreclosure action in New York. By successfully proving you are entitled to its protection, the remainder of your debt is discharged and your peace of mind restored after a difficult financial season. However, it is important not to forget that such defenses can be “waived,” meaning you can give up this protection if not properly brought before the court after a foreclosure action has been filed. It is also possible to file for discharge even if a foreclosure action has not been commenced if you believe you may be entitled to such based on the statute of limitations. For these reasons, it is essential that you contact a qualified Long Island foreclosure attorney who can analyze your case in order to determine whether the limitations period has run. Ronald D. Weiss, P.C., Attorney at Law is your premier foreclosure attorney on Long Island, serving both Nassau and Suffolk County residents. He can analyze the specific facts of your case in order to determine whether your lender has run afoul of the statute of limitations, and this may result in a complete discharge of your debt. Contact him today online or at 631.271.3737 for a no-risk consultation.