Scott Mollen Statute of Limitations for Mortgage Foreclosure Actions; Illegal Lockout Proceeding: This Week in Scott Mollen's Realty Law Digest
Scott Mollen discusses "Bank of N.Y. Mellon v. DeMatteis," where the court held that the bankruptcy stay pursuant to Section 362(a)(1) (§362) "tolls the [statute of limitations] for commencing a mortgage foreclosure action against the defendant debtor, regardless of whether that defendant owns the property at the time of the bankruptcy filing," and "Knowles v. 21st Mtge. Corp.," a landlord-tenant case where the court held that the tenant's failure to pay bills did not constitute abandonment of property.
December 05, 2023 at 12:52 PM
19 minute read
Foreclosures—Bankruptcy Stay Tolls Statute of Limitations for Commencing a Mortgage Foreclosure Action Against Debtor, Regardless of Whether Debtor Owned the Property At the Time of the Bankruptcy Filing—Under Limited Circumstances, an Automatic Stay May Be Extended to Nondebtors—Those Limited Circumstances Are "Usually When a Claim Against the Nondebtor Will Have an 'Immediate Adverse Economic Consequence On the Debtor's Estate'"
This appellate decision addressed the issue of "whether the stay provided by Section 362 of the 1978 Bankruptcy Code (11 USC §362[a]) operates as a 'statutory prohibition' under CPLR 204(a) to toll the statute of limitations (SOL) to commence a mortgage foreclosure action against a defendant debtor who no longer owns the property that is the subject of the mortgage foreclosure action."
The court held that the bankruptcy stay pursuant to Section 362(a)(1) (§362) "tolls the (SOL) for commencing a mortgage foreclosure action against the defendant debtor, regardless of whether that defendant owns the property at the time of the bankruptcy filing."
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