STATUTE OF LIMITATIONS BARRED ACTION ON THE NOTE | KEY POINTS
- diazanselmo
- Nov 29, 2023
- 2 min read
Updated: Mar 20
A Cook County circuit court entered a lengthy order dismissing The Bank of New York’s (“BONY”) foreclosure complaint against mortgagor, Debbie Bartelstein, based on two findings: (1) BONY failed to strictly comply with conditions precedent and (2) the statute of limitations indirectly barred the foreclosure of Bartelstein’s mortgage. The Bank of New York, as Trustee, etc., v. Bartelstein, Case No. 2007 CH 38051 (Ill. Cir. Ct. Sept. 27, 2023).
After multiple delays, both parties moved for summary judgment. The court allowed Bartelstein to raise failure of conditions precedent and statute of limitation as defenses in her summary judgment despite her failure to plead them previously. The court found an exception to the pleading requirement because BONY had more than three years to prepare its arguments in response to the summary judgment motion, providing “ample time and opportunity to answer them.”
Ultimately, the court found BONY’s demand notice to be substantively defective and a bar to foreclosure because Illinois required strict compliance with conditions precedent and the demand letter informed Bartels right to “cure the default” rather than the right to “reinstate the mortgage” after acceleration. Further, the court found BONY’s failure to initiate an action on the note prior to expiration of the 10-year statute of limitations fatal to its foreclosure of the mortgage. The court relied on cases from the 1800s which held that “the existence of the debt…is essential to the life of the mortgage” and “when the debt is…barred by the statute of limitations” the mortgage is unenforceable.
The court granted Bartelstein’s summary judgment motion and dismissed BONY’s amended foreclosure complaint with prejudice. The court also declared the $512,800 note extinguished and unenforceable and ordered BONY to record a release of the mortgage within 30 days. The take-away from this case is to beware of pertinent statutes of limitation and when in doubt, include a count to enforce the note. Obviously, for cases that have already been delayed due to extensive litigation or COVID-19 related delays, counsel will need to think outside the box for a solution.
