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Sunday – December 2, 2018

Kipuhulu Sugar Co. v. Nakila — Does a Different Statute of Limitations Apply to the Enforcement of Mortgages than to the Enforcement of Notes? (Foreclosure Workshop #48: Rebroadcast from October 15, 2017)

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In recent years, particularly in Florida, there has been increasing litigation regarding the applicability of the statute of limitations in foreclosure cases, and now courts in other states have started to wrestle in the mortgage context with this yet another confusing area of American law.

It seems wise therefore to repeat this important show this Sunday since recently courts in two jurisdictions have now surprisingly ruled that the statute of limitations for mortgages and deeds of trust is longer than for the underlying promissory note. How can this be?

On prior shows we have discussed how the statute of limitations, which sets a time bar controlling how long litigants have to sue on their claims in court, should be and is being applied to mortgage and trust deed loans (Listen to the January 31, 2016 Foreclosure Hour, Past Broadcasts, www.foreclosurehour.com).

Once again, the treatment of homeowners is shown to differ when compared to how the statute of limitations is applied in other contract actions.

Even though, for instance, a mortgage (and deed of trust) represent security for payment of the underlying debt and once the underlying debt obligation is uncollectible, having been paid or having expired by operation of law, it logically follows that the security for payment of the debt is extinguished as well.

Even the Fannie Mae and Freddie Mac universal mortgage forms recite that the mortgage is held as security for the debt.

But the requirements of logic never seem to deter foreclosure attorneys, who in Hawaii for instance have now begun successfully to argue the opposite, that a mortgage continues to be enforceable up to twenty years even though the note has become unenforceable due to the expiration of the applicable contract statute of limitations.

Recently, even the Hawaii Intermediate Court of Appeals came to this erroneous position, which issue is now finally headed to the Hawaii Supreme Court.

Will this counter-intuitive argument be coming to your jurisdiction soon?

Tracing the more than one-hundred-year-old case law origins of this erroneous argument as we do on today’s show is not only important in order to block its likely use by foreclosure attorneys in the future, but is important also to expose some of the most alarming weaknesses in the misuse of the doctrine of stare decisis which some judges think requires that past judicial decisions be followed no matter what, particularly by lower courts.

Bad precedents can become, like deadly viruses, fatal to personal and property rights.

And lastly, this newly emerging and erroneous statute of limitations argument clearly illustrates why homeowners need to unite, organizing nationally to effectively combat the otherwise proliferation of so many of these bad precedents being generated by what we have described on past shows as The Rule Ritual.

Gary Dubin

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Past Broadcasts