Statute Of Limitations: Some Clarity On The “Savings Provision”


15 December, 2022


Mortgage Lender and Servicer Alerts

Lenders and servicers need not be reminded of the continuing threat that the expiration of the statute of limitations presents to the successful prosecution of a mortgage foreclosure action.  That is why the rescue provision afforded by CPLR § 205(a) is so meaningful.  As our readers will know from earlier alerts, a plaintiff (in our context a mortgage holder) is permitted to bring a new action on the transaction within six months of termination of a prior action, where that action is terminated in any manner other then

  1. Voluntary discontinuance;
  2. Failure to obtain personal jurisdiction;
  3. Dismissal of the complaint for neglect to prosecute the action;
  4. Final judgment upon the merits.

The practicalities of what underlies the importance of this statute is the problem that when a foreclosure may be dismissed, by then, the six year statute of limitations since the acceleration of the mortgage may have passed.  That would then bar the initiation of a new foreclosure action – except that the statute does indeed allow a new action to be brought if the dismissal of the first action did not fall into one of the delineated categories.

But then the question becomes, precisely when after the dismissal of the first action must the mortgage holder begin the new action – understanding of course that the statute says it must be within six months of termination of the prior action?  But what is that exact moment?

A new case offers some clarification and confirms that minutia of this type always remains meaningful in the legal arena.  [Specialized Loan Servicing Inc. v. Nimec, 183 A.D.3d 962, 123 N.Y.S.3d 713 (3d Dept. 2020)]

Here, the mortgage holder argued that the six month period should be calculated from the date the dismissal order is served with notice of entry (and service of such an order in that fashion is typical and commonplace).  Citing previous authority, the court ruled, however, that service of the order with notice of entry was not the measuring point.  Rather, for the purposes of this statute, an action from which no appeal has been taken is considered terminated thirty days after mere entry of the court’s dismissal order, this date representing the expiration of the party’s right to appeal.

In a sense, it is fairly simple, but counsel needs to understand the point.  When a foreclosure is dismissed, if a new action can be begun, it must be within six months of entry of that order of dismissal.  Nothing else is involved.  Thinking about or relying upon other events could lead to what is in essence a disaster.  The beginning of a new action is something to be considered with dispatch in any event, but if it gets down to the last minute, this rule offers needed clarification.

Mr. Bergman, author of the four-volume treatise, Bergman on New York Mortgage Foreclosures, LexisNexis Matthew Bender (rev. 2022), is a partner with Berkman, Henoch, Peterson & Peddy, P.C. in Garden City, New York. He is also a member of the USFN, The American College of Real Estate Lawyers, The American College of Mortgage Attorneys, an adviser to the New York Times on foreclosure issues and writes a regular servicing column for the New York Law Journal. He is AV rated by Martindale-Hubbell, his biography appears in Who’s Who In American Law and he has been for years listed in Best Lawyers In America and New York Super Lawyers.