June 2, 2022

New York Statute of Limitations on Mortgage Debt Governed by GOL Section 17-105, Not 17-101

Court of Appeals: Extension or Revival Requires Written Promise from Debtor Rather Than Mere Acknowledgement
Holland & Knight Alert
Steven D. Gordon

A recurring issue in New York mortgage lending is under what circumstances the state's six-year statute of limitations on mortgage debts is extended or revived. The New York Court of Appeals ruled recently that this issue is governed by General Obligations Law (GOL) Section 17-105, which requires a written promise signed by the debtor to toll or revive a mortgage debt, rather than by the more general provision, GOL Section 17-101, which provides that a written acknowledgement of a debt is sufficient to revive other forms of debt. Batavia Townhouses, Ltd. v. Council of Churches Housing Dev. Fund Co., Inc., --- N.E.3d ----, 2022 WL 1631492 (N.Y. May 24, 2022).

Over the years, some New York courts have mistakenly applied GOL Section 17-101 to mortgage debts. The Court of Appeals, in a prior decision, had analyzed a mortgage debt under both provisions. Petito v. Piffath, 85 N.Y.2d 1 (1994). In its new decision, the Court of Appeals noted that Petito had not considered the threshold question of which section of the GOL applies in a mortgage foreclosure action.

Holland & Knight represented the debtor, Batavia Townhouses, in this case and argued that the validity of the mortgage debt was governed by Section 17-105, rather than Section 17-101. The trial court agreed and ruled in favor of the firm's client. New York's Fourth Judicial Department affirmed, becoming the first appellate court to explicitly address the issue. Batavia Townhouses, Ltd. v. Council of Churches Housing Dev. Fund Co., Inc., 189 A.D.3d 20 (4th Dept. 2020). The Court of Appeals now has affirmed the Fourth Department's decision.

The case was handled by Holland & Knight Partner Steven D. Gordon.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.

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