New Jersey

NJ Court Finds that SOL Bars Residential Foreclosure Action

The Superior Court of New Jersey, Bergen County, Chancery Division, recently rendered a decision that essentially provided the borrowers, who had failed to make even one payment on their loan, with a free house by barring the plaintiff from foreclosing on its mortgage loan. Anim Investment Company v. Shaloub, No. F-30508-15, 2015 N.J. Super. Unpub. LEXIS 3042 (Ch. Div. June 30, 2016). In that action, plaintiff Anim Investment Company sought to foreclose on a five-year mortgage defendants George Shaloub and Kathleen Shaloub had executed on Sept. 19, 1990, which had a maturity date of Oct. 1, 1995. Defendants immediately defaulted on the mortgage, and the foreclosure complaint therefore reflected that the mortgage was in default as of Nov. 1, 1990. Plaintiff filed the action on August 31, 2015.

In response to the complaint, Defendants filed a motion to dismiss, alleging that the statute of limitations (SOL) to enforce the mortgage had expired. Plaintiff opposed the motion and filed a cross-motion for summary judgment. The parties both initially based their arguments on the assumption that the applicable SOL was 20 years from the date of default, pursuant to N.J.S.A. 2A:50-56.1(c), but disagreed regarding the default date.

As the Shaloub court noted, the SOL relative to residential mortgage foreclosures (N.J.S.A. 2A:50-56.1) consists of three different subsections with different triggering events, the earliest of which should be applied…

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