This is a legally set time within which a foreclosure lawsuit must be filed with the court. The elapse of these time means that the lender’s claim is invalid thus he/she cannot initiate a foreclosure against your home. A foreclosure is usually treated as a breach of contract claim because of the mortgage contract. The statute of limitations in foreclosures is believed to start when the homeowner fails to make his/her monthly payments and the mortgage is accelerated as ruled in the case of Deutsche Bank v. Beauvais; and typically begins counting down from the due date of the first omitted mortgage payment or the date of the last payment.
How the foreclosure statute of limitations works
Different states adopt different foreclosure statute of limitations which may apply on either or both judicial and non-judicial foreclosures. Therefore to be well informed about your state’s foreclosure statute of limitation visit your state legislature web page. Let us assume that your state’s foreclosure statute of limitation is 4 years, if a complaint for foreclosure is brought against you before the end of the four years, then it won’t matter how long the case remains pending because foreclosures may take a lot of time between 3 to 15 years before been concluded. For example if your lender files a foreclosure suit against you in 2006, 3 years after your default, and the case goes up to 2009, despite that the statute of limitation expiring in 2007, your case will be carried on.
Let us say in our case above you defaulted in January and the bank filed the lawsuit in March 2007 and for some reason like a procedural error by the bank, resulting to the court cancelling or dismissing the foreclosure in June 2007; the statute of limitations will apply to the subsequent foreclosure(s) therefore, the bank has to re-file the foreclosure lawsuit before December 2007 when the statute of limitation will expire. Thus if the case is dismissed for instance in 2009, the foreclosing entity cannot re-file the suit against you since the statute of limitation is out of time.
Foreclosure statute of limitation as a defense
It is an effective defense that can help you stall a foreclosure attempt on your mortgage, but a careful consideration has to be made and thus it will be prudent to consult an attorney regarding the probability of success by using the statute of limitation as a defense if you believe it has expired. Another advantage of consulting a lawyer is that s/he will help you unearth other defenses and/or insufficiencies in the foreclosure lawsuit against you.
This foreclosure statute of limitations takes the form of an affirmative defense, therefore it is the duty of the debtor in question to bring it to the attention of the court, failure to do so the court will deem as not insisted on or rather waived allowing the lender to carry on with the foreclosure anyway.
Sources:
http://www.alllaw.com/articles/nolo/foreclosure/statute-of-limitations.html
http://www.nolo.com/legal-encyclopedia/the-statute-limitations-foreclosure-actions.html