Before You Sign Anything, File Anything, Consider the Statute of Limitations

With tens of thousands of cases running many years before foreclosure is started and with many cases ripe for dismissal for lack of prosecution, the Banks are in a full court press attempting to get modifications or even going to trial on cases they know are problematic at best. I am receiving scores of reports of cases dismissed on the grounds they are barred that the statute of limitations has run.

If grounds exist for dismissal (check with a lawyer who really knows) the case cannot be refiled if the statute of limitations has run. If the case has not started and you have been living in the home for years without paying, the statute may have already run or you might be able to “run the statute.” (Check with an attorney licensed in the jurisdiction in which the property is located).

The meaning of the statute of limitations is simple: everyone with a claim has a right to bring it. BUT the Courts will not entertain any action that is stale. There are two ways the case might be stale — (1) the statute of limitations which is by definition a statute passed by the legislature of each state and (2) the common law doctrine of laches that might be supplemented by statutes or rules of procedure (laches is rarely applied). Laches on its own is generally a weak defense. But combined with the one year rule in Florida, for example, for prosecuting the case forward, it might have more teeth. But you would need to show inaction for a long period of time (i.e., no suit filed) PLUS the failure to prosecute. There are specific rules of civil procedure covering the dismissal of a cause of action for failure to prosecute.

Applying the meaning of the statute as applied to mortgage foreclosures is apparent. The foreclosing party has sent a notice of default and acceleration because you didn’t make a payment or they have no sent a notice and you have not been making a payment. The time to sue on the note and mortgage is based is usually based upon the statute of limitations as applied to contracts, but there might be some states that specify mortgage foreclosures. If the “Bank” has run the statute of limitations they can never attempt to sue on the note or mortgage again and in non-judicial states they cannot file a notice of default and notice of sale.

There are things that delay or “toll” the statute of limitations like various payment plans or agreements like modifications (that could even re-start the statutory period), bankruptcy and anything else that prevents the claimant from filing the claim for damages or foreclosure. Each case must be examined as to the running of the statute of limitations. In Florida the statute is 5 years. So for example if the last payment you made was November of 2008, then the next payment due was in December of  2008. That is when the statute starts running. If the Bank in Florida, which is a judicial state, has not actually filed suit in foreclosure, they are probably now barred from doing so.

PRACTICE NOTE: THE BANKS ARE FREQUENTLY MAKING AN ERROR WHEN THERE IS A MODIFICATION AGREEMENT PRESENT THAT  MIGHT ENABLE YOU TO GET THE CASE DISMISSED FOR YOUR CLIENT AND, IF THE CASE IS STALE UNDER THE STATUTE, THE DISMISSAL COULD BE “WITH PREJUDICE” OR EVEN IF NOT WITH PREJUDICE IT WOULD AMOUNT TO THE SAME THING. The error they are making is that they take the date of the initial “default” (which of course can be challenged on many grounds that have been explained on this blog) and they sue on the default of the note instead of the the default in the modified note terms. The time to bring that up is as close to trial as possible when they can’t do anything about it. In Florida, this would force them to refile in the face of statutory requirements that requires them to be the owner of the loan.

For this reason I am suggesting to our own analysts as well as all the rest of the analysts assisting attorneys and pro se litigants to include the relevant statute of limitations in their report.

Here is a link that can assist you. I caution anyone about using this list. Things change so you need to look up the actual statute and the language of the statute might be such that only an attorney who has researched the statute will be able to gave an opinion as to whether it applies in your case. http://www.nolo.com/legal-encyclopedia/statute-of-limitations-state-laws-chart-29941.html

For homeowners and lawyers seeking litigation assistance please call 520-405-1688 or go to www.livingliesstore.com

Tags: "modification" agreement, dismissal of action, failure to prosecute, laches, statute of limitations
Posted in foreclosure mill, Modification, Motions, Pleading, Servicer |