For a foreclosure commenced in 2010 the Plaintiff elected to call due to the entire amount secured by the mortgage. That action was dismissed in 2012. In 2016, Plaintiff brought an action under New York’s Real Property Actions and Proceedings Law Article 15 (“Action to compel the determination of a claim to real property”) to have the mortgage canceled and discharged of record on the ground that the statute of limitations had expired. The Defendant-mortgagee asserted that Plaintiff had abandoned the property and that Defendant’s being in possession of the property since 2013 pursuant to paragraph nine of the mortgage (“Lender’s Right to Protect Its Rights in the Property”) had tolled the statute of limitations. Under paragraph 9, if the borrower abandoned the property, the mortgagee may “do and pay for whatever is reasonable or appropriate to protect Lender’s interest in the Property and Lender’s rights.”The Supreme Court, Westchester County, grant of the Defendant’s motion for summary judgment dismissing the complaint was reversed by the Appellate Division, Second Department, which also granted the Plaintiff’s motion to dismiss the counterclaim to foreclose the mortgage as being time-barred. According to the Appellate Division, while

“[t]he statute of limitations will not run against a ‘mortgagee in possession’ since the mortgagor’s consent to that possession is a continuing acknowledgment of the debt [citations omitted]…[T]he mere fact that [the Defendant] took measures to protect its rights in the property under paragraph nine of the mortgage does not establish that the parties reached an agreement for [the Defendant] to take possession of the premises with all the rights and obligations that possession entails. Paragraph nine of the mortgage merely allows the mortgagee to take measures to protect its rights in the property [citations omitted], but the exercise of those rights cannot be construed as the mortgagor’s continuing acknowledgment of the debt so as to toll the statute of limitations.”

Mardenborough v. U.S. Bank N.A., 2022 NY Slip Op 00034, decided January 5, 2022, is posted at https://www.nycourts.gov/reporter/3dseries/2022/2022_00034.htm.