In New York, a lender may, in electing which of its remedies to pursue when a borrower defaults on its mortgage loan, choose to pursue a foreclosure of its mortgage. Because all foreclosures in New York are judicial, a lender must follow specific steps when pursuing its foreclosure action or risk opening itself to defenses related to the same. One such defense, is the defense that the action is barred by the statute of limitations. Under CPLR 213 (4), the statute of limitations for a lender to file a foreclosure action in New York is six years.
In raising a statute of limitations defense, a question of law may arise as to when the lender accelerated the loan, which begins the running of the six-year statutory period. Courts have held that the lender must take an “unequivocal overt act” and deliver a notice to the borrower expressly accelerating the loan, or, absent such a notice, the loan will still be deemed to have been accelerated if the lender commences its foreclosure action by filing a verified complaint and lis pendens. Several cases have taken on the task of establishing what constitutes an unequivocal notice. Recently, the Appellate Division, Second Department addressed the issue in Knox v. Countrywide Home Loans, Inc., 205 A.D.3d 792, 169 N.Y.S.3d 101 (2022).
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