Statute Of Limitations On Foreclosure

foreclosure statute of limitations

The effect of the COVID-19 pandemic is still being felt across the world. Many people have suffered financially because of the pandemic and, as a result, foreclosure has become a real concern for many people. If you live in New York and foreclosure is a concern for you, this article will help explain what the statute of limitations is for foreclosures in New York and explain why the statute of limitations is important. 

 What Is A Statute Of Limitations?

A statute of limitations is simply a law that sets a time limit on how long a person or entity has to file a legal action for a specific legal offense. Statutes of limitations apply in both criminal and civil cases. In the civil setting, a statute of limitations essentially determines how long you have to sue another person for a specific civil offense. For foreclosure cases, the statute of limitations sets a specific amount of time in which a lender may file a claim against a borrower to foreclose upon a property. 

Time Limits On Foreclosure

Is there a statute of limitations on foreclosure? In New York, the statute of limitations for foreclosures is six years. Under New York law, foreclosure specifically refers to when a lender files an action against a borrower for failure to pay on a loan. The foreclosure process begins when the lender files the requisite documentation in a New York Supreme Court asking the court to allow the lender to foreclose on the borrower’s property. If the lender files the suit outside the six-year statute of limitations, the lender may be barred from foreclosing on the property because mortgage foreclosure would be past the statute of limitations. 

When Does The Limitations Period Begin To Run

Under New York law, the six-year statute of limitations for mortgage foreclosures “begins to run” (meaning the time frame for filing a foreclosure suit begins to run out) either (a) when a borrower misses a payment, or (b) when the lender makes a clear, unequivocal decision to accelerate the loan. 

As for (a), when a borrower misses a loan payment, the lender has exactly six years to file a foreclosure action because of that missed payment. So, if the missed payment occurred in 2021, the lender would have to file for foreclosure by 2027. Each time the borrower misses a payment, the lender has six years from the date of the missed payment to file for foreclosure. But, monthly payments that are more than six years past due fall outside of the statute of limitations on foreclosure debt, which means the lender cannot collect on those payments. 

Alternatively, option (b) regarding acceleration works a little differently. What is acceleration in the mortgage loan context? Well, most mortgage loans contain an acceleration clause that allows a lender to make due the entire loan balance when a borrower defaults on the loan (meaning the borrower is delinquent in making payments on the loan). Accelerating the loan stops buyers from reinstating the loan by paying past due balances. Instead, when the lender accelerates the loan, the buyer must pay the full amount of the loan unless some other requirements are met. So, once a lender accelerates a mortgage loan, New York law says that the lender has exactly six years from the date of acceleration to file for foreclosure. If the lender fails to do so, the lender may not be able to foreclose on the property. 

Actions That Revive or Toll the Limitations Period

Each missed payment or other default of the mortgage agreement will “revive” the foreclosure statute of limitations, meaning that a lender can file for foreclosure of property within six years of each missed payment or default. Similarly, if a lender accelerates the loan, the lender can decelerate (a.k.a stop the accelerations of the loan) and the statute of limitations would begin again if the borrower defaults again after the acceleration is stopped. 

statute of limitations foreclosure

Tolling the statute of limitations refers to when the timeframe within the statute of limitations is suspended. Some activities can temporarily pause or toll the statute of limitations, such as the borrower being deemed legally incompetent, or a borrower filing for bankruptcy. When the statute of limitations is tolled, it can mean that the lender may be able to file for foreclosure even after the time in the statute of limitations has passed.  During the height of the pandemic, Governor Cuomo passed legislation that tolled the statute of limitations for certain civil cases in New York. Similarly, certain federal laws and executive orders had an impact on how foreclosure cases were handled across the U.S. If you live in New York and you are facing foreclosure, our experienced attorneys at the Law Offices of Yuriy Moshes can help you understand the impact such laws have on you and your property. 

Foreclosure Notice Provisions

New York law requires that lenders provide borrowers with certain information 90 Days prior to foreclosing on the borrower’s property. If the lender fails to properly notify a borrower that foreclosure is proper, the lender may not be able to foreclose on the property. In New York, statutes require that lenders provide the following information to a borrower before the lender may foreclose: 

  • Notice That The Borrower Could Lose His Home And Must Read The Notice
  • Notice That The Loan Is In Default
  • The Number Of Days The Loan Has Been In Default
  • The Total Amount Due In Order To Cure The Default
  • A List Of At Least Five Local Non-profit Agencies That Provide Counseling
  • Notice That The Lender May Commence A Foreclosure Action Against You Following Expiration Of The Ninety-day Notice Period.

As soon as you receive notice that your property may go into foreclosure, it is crucial that you contact an experienced foreclosure attorney. Our team of attorneys is here to help you if you are concerned about the potential of foreclosure. Please contact us today if you live in New York and you are in need of foreclosure advice. 

Raising The Statute Of Limitations As A Defense To Foreclosure

If the six-year time limit in the statute of limitations has passed, a borrower can raise the statute of limitations as a defense against their property going into foreclosure when the lender files a foreclosure action. However, the borrower must raise the statute of limitations as a defense in a timely fashion, otherwise, the borrower may not be able to raise the defense at all. Having an experienced foreclosure attorney is crucial when it comes to statute of limitations defenses and other defenses as well. Our attorneys know how to review all of the information related to your mortgage in a way that will help you consider all of the options that can save your home. 

If The Statute Of Limitations Runs Out After Foreclosure Starts

Once a lender files for foreclosure, the statute of limitations is “tolled” or paused. This means that the borrower is unable to raise the statute of limitations as a defense if the time frame in the statute of limitations runs out while the foreclosure lawsuit is pending. For example, if the lender files for foreclosure in January of 2021, but the foreclosure statute of limitations runs out in February of 2021, the borrower cannot raise the statute of limitations as a defense in March of 2021 if the foreclosure proceedings are still ongoing. Why? Because the statute of limitations was paused when the lender filed the foreclosure suit in January. 

Restarting The Statute Of Limitations

Some actions can restart the statute of limitations. As previously mentioned, the statute of limitations technically begins to run each time that a borrower misses payments or “defaults” on the mortgage agreement. Other actions can cause the statute of limitations to restart, too. If you are facing foreclosure, you should consult with an attorney to understand the best way to protect yourself from restarting the foreclosure statute of limitations. 

Foreclosure Statute Of Limitations By State

Statutes of limitations vary from state to state, including in foreclosure cases. Likewise, the way courts interpret such statutes can vary from state to state. For New Yorkers, it is important to understand that the statute of limitations can create a lot of complications in foreclosure cases. Our experienced foreclosure attorney, Gennady Litvin, knows the ins and outs of foreclosure cases, including the statute of limitations. Gennady and our team want to help you navigate the foreclosure process and potentially save your home if you are a New Yorker facing foreclosure. 

 Applicable Case Law

Surprisingly, mortgage companies and other lenders often do not pay close attention to the loans in which they have invested and they unwisely allow the foreclosure statute of limitations to lapse on mortgages before filing an official lawsuit. The following cases offer some examples of when the statute of limitations has saved families in New York from losing their properties: 

In Beneficial Homeowners Service Corp. v. Tovar, 150 A.D.3d 657, (N.Y. App. Div. 2nd Dep. 2017) a couple successfully demonstrated that their lender was barred from continuing a foreclosure action on their property because the statute of limitations had lapsed. This means that the family was able to keep their home. 

Similarly, in Rack v. Rushefsky, 5 A.D.3d 753 (2004) a New York court found that the lender had failed to file for foreclosure in the time required by the statute of limitations. This led to the lender being unable to foreclose on the property. 

There are numerous other cases in which the statute of limitations leads to homeowners winning their foreclosure suits in New York. Good foreclosure attorneys should always consider the statute of limitations when considering potential defenses to foreclosure suits in New York. 

Get A Consultation From Foreclosure Attorney

Our team understands the complicated issues that can arise in foreclosure lawsuits. We want to fight for you to keep your home and have peace from the stressful foreclosure process. If you live in New York and you are facing foreclosure, please contact our team today to see how we can help. We are here to offer you a free consultation when you are ready. 

FAQ section 

Can I take my mortgage company to court?

Yes! You absolutely can. If your mortgage lender acts inappropriately during the foreclosure process, you may be able to sue the mortgage lender for wrongful foreclosure.

Do mortgages have a statute of limitations?

Yes, in a way. Depending on the mortgage-related lawsuit to which you may be referring, there are several types of statutes of limitation that may be applicable to a mortgage. For example, a foreclosure action has a limitation of six years. But, other actions, like fraud related to mortgage agreement, may have a different set of limitations.

Can the  bank come after you for foreclosure?

Banks have a right to collect on the money they are owed. So, if you owe a bank money in foreclosure, yes, the bank may be able to “come after you” in order to collect on the loan.

Can you sue for foreclosure?

If a lender wrongfully begins the foreclosure process, borrowers can sue the lender for wrongful foreclosure. Homeowners have been known to successfully win large sums in wrongful foreclosure actions, even wrongful foreclosure statute of limitations actions.

Can the foreclosure process be stopped?

Yes! There are numerous ways to stop the foreclosure process. In fact, we have a few articles that discuss how to stop foreclosures from taking place. Our attorneys know the various ways to stop a foreclosure in New York. If you are facing foreclosure, let us see how we can help you find a way to stop the foreclosure process.