New Jersey Court Bars Foreclosure Action Initiated More Than Six Years after Maturity Date

The Superior Court of New Jersey, Chancery Division, recently held that a foreclosure action commenced more than six years after the maturity date of the note and mortgage was barred by the applicable statute of limitations.  See Anim Investment Co. v. Shaloub, F-30508-18 (Ch. Div. June 30, 2016).  In the case, the defendants had executed a note and mortgage in 1990 and missed their first monthly payment that same year.  The maturity date was October 1, 1995, and the plaintiff initiated its foreclosure action in September 2015.  The parties filed cross-motions, disputing whether the action was time-barred.  Under N.J.S.A. 2A:50-56.1, which was enacted in 2009, an action to foreclose a residential mortgage shall not be commenced following the earliest of: (i) six years from the maturity date of the note or mortgage; (ii) 36 years from the date of the recording; or (iii) 20 years from the date of default.  Although the parties initially agreed that the 20-year limitations period applied but disagreed on when that period began, the court directed additional briefing and argument on whether (i) the statute applies retroactively; and (ii) the six-year period applied instead.  After argument, the court held that the action was barred.  First, the court found that the statute applied retroactively because it was meant to be curative and provide guidance on a previously-unaddressed issue.  If it was not applied retroactively, there would be no limitations period on any pre-2009 mortgage.  Second, the court found that the six-year limitations period applied.  Unpersuaded by the plaintiff’s unsupported argument that the six-year period only applied to actions on the note, it found that the six-year period began running in 1995 and expired in 2001.  Therefore, the action was dismissed.

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