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Get Rid Of A Stale Mortgage By Bringing An Action Under RPAPL 1501(4)

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  • Posted on: Oct 5 2018

Typically, a mortgage on real property is delivered to stand as security for the repayment of an obligation evidenced by a promissory note.  A mortgage is an encumbrance on real property.  If there is an opportunity to remove such an encumbrance, it makes sense to do so.  For example, when a home mortgage is fully paid, a homeowner typically sees to it that a satisfaction of mortgage is obtained from the lender and promptly recorded.

In situations where a mortgage appears as a lien of record on real property, but the statute of limitations has expired for the mortgagee to commence an action to foreclose the mortgage, RPAPL 1501(4) permits the mortgagor (or any other “person having an estate or interest in the real property”) to commence an action to have the encumbrance removed of record.  RPAPL 1501(4) provides:

Where the period allowed by the applicable statute of limitation for the commencement of an action to foreclose a mortgage, or to enforce a vendor’s lien, has expired, any person having an estate or interest in the real property subject to such encumbrance may maintain an action against any other person or persons, known or unknown, including one under disability as hereinafter specified, to secure the cancellation and discharge of record of such encumbrance, and to adjudge the estate or interest of the plaintiff in such real property to be free therefrom; provided, however, that no such action shall be maintainable in any case where the mortgagee, holder of the vendor’s lien, or the successor of either of them shall be in possession of the affected real property at the time of the commencement of the action. In any action brought under this section it shall be immaterial whether the debt upon which the mortgage or lien was based has, or has not, been paid; and also whether the mortgage in question was, or was not, given to secure a part of the purchase price.

Thus, a mortgagor need not wait for the mortgagee to commence foreclosure proceedings and defend by asserting a statute of limitations defense to have the lien of the mortgage extinguished of record.

“[A]n action upon a bond or note, the payment of which is secured by a mortgage upon real property, or upon a bond or note and mortgage so secured, or upon a mortgage of real property, or any interest therein” is subject to a six-year statute of limitations.  See CPLR 213(4).  In mortgage foreclosure actions, the statute of limitations begins to run from each unpaid installment, from the time that the mortgagee is entitled to receive full payment or the time the debt is accelerated.  See Bank of New York Mellon v. Celestin, 164 A.D.3d 733 (2nd Dep’t 2018).  “The law is well settled that, even if a mortgage is payable in installments, once a mortgage debt is accelerated, the entire amount is due and the Statute of Limitations begins to run on the entire debt…[because]…once a mortgage debt is accelerated, the borrowers’ right and obligation to make monthly installments ceased and all sums become immediately due and payable, and the six-year Statute of Limitations begins to run on the entire mortgage debt.”  EMC Mortgage Corp. v. Patella, 279 A.d.2d at 604 (2nd Dep’t 2001) (citations, internal quotation marks and internal brackets omitted.)

In 21st Mortgage Corp. v. Nweke (2nd Dep’t October 3, 2018), the Court decided issues related to RPAPL 1501(4).  There, lender commenced an action to foreclose a mortgage obtained in 1999.  A foreclosure action was commenced in April of 2006 after defendant defaulted but was discontinued after a traverse hearing determination that defendant was not properly served with process.  A second foreclosure action commenced in 2007, was discontinued in January of 2013 by order of the court on lender’s motion.  In September of 2014, plaintiff (a subsequent assignee of the original lender) commenced an action to foreclose the mortgage.  The defendant borrower answered the complaint, asserted several affirmative defenses (including a statute of limitations defense) and counterclaims (among others, to cancel and discharge the mortgage pursuant to RPAPL 1501(4)).

Thereafter, plaintiff moved for summary judgment.  In response, defendant borrower cross-moved for summary judgment dismissing the complaint on statute of limitations grounds as well on her counterclaim pursuant to RPAPL 1501(4).  Among other things, supreme court denied plaintiff’s motion for summary judgment, granted defendant borrower’s motion for summary judgment on statute of limitation grounds and, sua sponte, imposed an equitable mortgage, in plaintiff’s favor, on the subject property.

In reversing supreme court, the Second Department held that defendant borrower “established her prima facie entitlement to judgment as a matter of law on her counterclaim pursuant to RPAPL 1501(4) to cancel and discharge the mortgage by demonstrating that more than six years had passed since the mortgage was accelerated and therefore this foreclosure action was time-barred.”

Further, the Court vacated that portion of supreme court’s order imposing an equitable mortgage on the property because “plaintiff never requested this relief, and the defendant was not afforded any notice nor an opportunity to be heard on this issue which amounted to a denial of the defendant’s due process rights.”  Further, the Court recognized that the doctrine of equitable mortgage does not apply “where a legal written mortgage existed” and, thus, was not applicable to the case being decided.


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