If there's a significant time lapse between when you stop making mortgage payments and when the lender initiates a foreclosure, the foreclosure might violate the statute of limitations. This means you just might have a defense to the foreclosure. Read on to learn what a statute of limitations is and how it can be used to protect you from foreclosure. (Find out when foreclosure typically starts after you stop making payments.)
A statute of limitations sets the time limit for bringing a legal claim, like initiating a foreclosure action. If the case is filed after a certain date, it is not valid and can be dismissed. The time limit varies depending on the type of action or claim that is involved. There are different statutes of limitations for oral contracts, written contracts, personal injury, and fraud. (Get more information about statutes of limitations.)
Generally, the statute of limitations that's relevant to home foreclosures is the one for written contracts. However, some states—like New Jersey—have a specific statute of limitations for foreclosure.
Each state has its own statute of limitations, which ranges from three years to 15 years. Most states fall within the three to six year range. To determine the statute of limitations in your state, look in your state’s statutes. These are often available online at your state’s legislature webpage.
To learn how to check your state statutes, visit our Laws and Legal Research Center. You can find your state's statute of limitations for written contracts in our Chart: Statutes of Limitations in All 50 States. If you need help finding the statute of limitations that applies to your situation, ask an attorney.
The statute of limitations clock for a mortgage foreclosure usually starts when the default occurred. (The “default” is, for example, when you stopped making mortgage payments. Learn more about what it means to default on a mortgage loan.)
It's usually calculated from the date of the last payment or from the due date of the first missed mortgage payment. (To learn more, see Statutes of Limitations: Is It Too Late to Sue?)
If the lender starts foreclosure proceedings after the statute of limitations has expired, the lender’s claim is invalid—and the lender is not entitled to foreclose.
The statute of limitations is an affirmative defense to foreclosure. This means it is the homeowner's duty to raise the issue in the foreclosure. If the homeowner doesn't raise the statute of limitations defense, then the defense is waived and the lender can continue with the foreclosure.
If the statute of limitations runs out during the foreclosure, then it's not a defense to the foreclosure. This means that even if a foreclosure takes years to complete, you don't have a defense to the foreclosure based on the statute of limitations.
Example. Say your lender files a foreclosure lawsuit in June 2018, but the statute of limitations runs out in December 2018 while the foreclosure is pending. In this scenario, a statute of limitations defense is not available. To be in compliance with a statute of limitations, the lender only needs to start the foreclosure before the time limit expires.
If the lender stops the foreclosure action, which often happens if the lender discovers a procedural error, and then refiles the case, the homeowner can use the statute of limitations defense. If the lender restarts the case, it must do so within the time period provided by the statute of limitations.
Example. In the example above, if the lender dismisses the foreclosure in October 2018, the lender would need to restart the foreclosure prior to December 2018 to meet the statute of limitations. However, if the homeowner were to you make a payment in the interim, this will usually reset the statute of limitations.
You’ll most likely need an attorney to help you review your ability to raise a defense based on the statute of limitations and argue it in court if you decide to go this route. Also, keep in mind that any given foreclosure or legal situation has many potential claims and defenses, so it's recommended that you seek the advice of local counsel or a legal aid organization to explore all possible defenses that might be available in your particular situation.