Bank filed five months after the six-year window closed, court rule
A long-running foreclosure dispute just ran headlong into New York's amended statute of limitations rules - and the lender came up short.
The Appellate Division, Second Department reversed a foreclosure judgment against property owner 35 Pleasure LLC, ruling that Bank of New York Mellon's 2018 action was filed outside the six-year limitations period. The court directed the mortgage cancelled and discharged from the property record.
The timeline matters. The bank first sued to foreclose on the same mortgage in December 2011, then voluntarily discontinued that action in 2014. Before recent legislative changes, that discontinuance would have effectively reset the clock, giving the lender a fresh window to refile.
That changed with the Foreclosure Abuse Prevention Act (FAPA), enacted in December 2022. Under FAPA, once a mortgage debt is accelerated - which happens automatically when a lender files a foreclosure complaint - the six-year limitations period runs uninterrupted. A voluntary discontinuance no longer stops or resets it.
The math from there is straightforward. The bank accelerated the debt in December 2011. Six years ran. The limitations period expired in December 2017. The bank filed this action in May 2018 - five months too late.
35 Pleasure had argued exactly this, cross-moving to dismiss the 2018 case as time-barred and to cancel the mortgage under RPAPL 1501(4). The trial court denied the motion and granted the bank a judgment of foreclosure and sale. But after FAPA took effect, 35 Pleasure renewed the motion, arguing the statute constituted a change in the law that altered the prior determination.
The appellate panel agreed unanimously. "In light of the statutory amendments enacted by FAPA, the voluntary discontinuance of the 2011 action did not de-accelerate the mortgage debt, and, thus, the applicable limitations period expired in December 2017," the court wrote in its Sept. 16 decision. It reversed the foreclosure judgment, vacated the earlier order denying 35 Pleasure's cross-motion, and directed the mortgage canceled and discharged.
The bank challenged FAPA's retroactive application and constitutionality. The court dismissed both arguments, citing recent precedent from New York's Court of Appeals upholding the statute's key provisions.
For lenders and servicers managing legacy portfolios in New York, the ruling reinforces that FAPA has closed the door on a once-common strategy - discontinuing and refiling foreclosure actions to extend the limitations window.
The decision is uncorrected and subject to revision before publication in the Official Reports.
