Deadlines for Enforcing a Mortgage
The Appeals Court issued a decision last week concerning the deadline for enforcing a mortgage in Massachusetts, under the obsolete mortgage statute. The full decision, Thornton v. Thornton, is included below.
Thornton isn’t the first appellate decision to look at this issue, and continues a trend of Massachusetts courts rejecting attempts by borrowers to eliminate mortgage requirements.
What Is a Mortgage?
A mortgage is an agreement that gives a lender security against a borrower when making a loan for real property. Under a standard mortgage, a lender is permitted to foreclose a property if the debt is not repaid. Without a mortgage, a lender would only have the right to sue the borrower for the owed money, and have no claim to the property itself.
A mortgage, importantly, is only a security agreement, and not the loan itself. While it is common for homeowners to state they are “paying their mortgage”, in reality, the homeowner is making payments towards the loan associated with the mortgage, known as the promissory note.
Mortgages and the Statute of Limitations
Massachusetts, like nearly every other state, has deadlines for bringing civil lawsuits, known as a statute of limitations. A common misconception is that the deadline for bringing a breach of contract claim applies to the enforcement of mortgages. The argument goes that, if the lender has not pursued a foreclosure for the owed loan within six years, no claim exists.
As explained in Thornton, this deadline applies only to enforcing the loan itself . . . not the mortgage. In other words, even if six years has passed since the loan default, the lender can still enforce the mortgage through a foreclosure.
Mortgages and the Obsolete Mortgage Statute
A bar, however, does exist for enforcing a mortgage through the obsolete mortgage statute. This law prevents the enforcement of mortgages in limited circumstances:
35 years from the recording of the mortgage or, in the case of a mortgage in which the term or maturity date of the mortgage is stated, 5 years from the expiration of the term or from the maturity date, unless an extension of the mortgage, or an acknowledgment or affidavit that the mortgage is not satisfied, is recorded before the expiration of such period.
The borrower in Thornton argued that this deadline came from the promissory note. The Appeals Court rejected this argument, holding there was no basis for using the deadline from the note for this purpose.
In this case, because there was no maturity date stated in the mortgage, the thirty-five year deadline applied.
Practical Implications For Enforcing a Mortgage
Thorton underscores a critical point about the obsolete mortgage statute: courts, in my view, interpret this law strictly and will not allow a borrower to escape the enforcement of a mortgage unless all conditions of the statute are met. This statute is primarily intended for mortgages that are “up in the attic” and long forgotten by lenders, and courts are reluctant to extend this law much further than that.
This isn’t to say that a borrower has no options against a foreclosure. To the contrary, I’ve help many homeowners avoid foreclosure based on a wide array of defenses. None of these defenses, however, involve an elimination of the mortgage. For this reason, borrowers need to be realistic when dealing with such a matter.
If you need assistance with a mortgage matter, contact me for a consultation.y19P1222