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Limitation Periods on Mortgage Enforcement (Part II)

In the last issue of our Mortgage and Real Property Report we touched briefly on the limitation periods that apply to the enforcement of legal obligations under a mortgage.  Because lenders of all types are subject to these strict statutory limitation periods governing how long they have to protect their rights, and because the question arises any time a mortgage goes into default, the issue is certainly worth re-visiting in greater detail.

To begin with, mortgagees have two pieces of legislation to worry about:

The RPLA focuses on real estate and other interests in land, such as mortgages. The LA deals with other kinds of limitations periods – yet these may still affect mortgages and interests in land.  It is therefore important to be aware of all of the nuances.

The following is a general – and not exhaustive – list, as there are often exceptions, qualifications and special considerations relevant to each of these time periods, depending on the facts:

Also, the legislation stipulates that a limitation period will usually begin to run the moment the mortgagee is entitled to bring “a claim” (which arises from “injury, loss or damage” caused by someone’s “act or omission”).  This is an important threshold question.

To further complicate matters, additional legal considerations apply to mortgages payable “on demand”, and for guarantees and collateral mortgages. Other rules apply to debts under a demand promissory note which have been acknowledged by the debtor, and where there has been part payment of a debt.

Complex as they may be, it is crucial for mortgagees know these deadlines:  if they get missed, the mortgagee’s action against the mortgagor is statute-barred and can no longer be launched; and the corresponding mortgage remedies are at a permanent standstill.