How Long Can A Lender Wait Before Foreclosing Or Suing On A Note?

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  2. How Long Can A Lender Wait Before Foreclosing Or Suing On A Note?
How Long Can A Lender Wait Before Foreclosing
Real Estate

Years ago, Justice Oliver Wendell Holmes, Jr. asked: “What is the justification for depriving a man of his rights, a pure evil as far as it goes, in consequence of the lapse of time?” Several reasons exist: [1] our laws aim to resolve just claims within a reasonable time; [2] if a claimant sits on her rights for too long, relevant evidence to disprove the claim may be lost or destroyed by the passage of time; and [3] litigation of a long-dormant claim by result in more cruelty than justice.

Consequently, the law establishes a limitation period on almost all claims, including claims concerning mortgages and promissory notes. It is well settled law that mortgages and deeds of trust do not create debt. Rather, the debt is created by an agreement to pay set forth in a promissory. Mortgages and deeds of trust are merely security devises providing collateral for the debt actually created under the promissory note. So, although lenders often consider mortgages when considering remedies against a defaulting borrower, e.g. A.R.S. § 33-701, et seq., lender and other creditors should be mindful of Arizona’s statute of limitations regarding breach of contract claims. For example, A.R.S. § 12-548 imposes a six-year limitations period to bring an action once a default occurs.

The usual remedy concerning a default of a note and/or mortgage, is to proceed to foreclose on the collateral securing the debt. A.R.S. § 33-701, et seq does not explicitly state any limitations period for foreclosing on a mortgage. So, several questions arise. What is the limitations period for foreclosing on a mortgage? What happens if the six-year limitations period on the underlying note expires prior to bringing a foreclosure action? In such a case, does the mortgage holder still have the right to bring a foreclosure action? After all, the mortgage will still appear as a lien against the property and any attempts to sell or refinance the property will discover this. If the mortgage lender cannot foreclose, where does that leave the viability of the debt?

In answering these questions, the Arizona courts analyzed decisions in other jurisdictions which generally fell into two views: the two-remedy rule and the incident rule. In short, the “two-remedy rule” (the majority opinion) holds that even though the time period to file an action may have expired per A.R.S. § 12-548, the mortgage holder can still foreclose because the right to the debt still exists (in other words, the borrower still owes the money but the lender cannot sue on the note once the statute of limitation expires); whereas the “incident rule” (the minority opinion) holds that the mortgage is merely an incident of the debt itself so that if the debt is extinguished, so is the right of the mortgage lender to foreclose on the mortgage. So under this rule, once the statute of limitations expires, the lender loses both the right to sue on the note and the right to foreclose.

After analyzing the issue carefully, the Arizona courts maintain that A.R.S. § 12-548 operates as a limitation on foreclosure actions and on actions for the underlying debt where the debt has been extinguished or where it is not clear that a debt exists. Where the debt is not extinguished, the right to the debt remains but the remedy is barred meaning that foreclosure or a lawsuit for breach of the note are both impermissible. See De Anza Land and Leisure Corp. v. Raineri, 669 P.2d 1339, 1343, 137 Ariz. 262, 266 (Ariz. App. 1983).

A later case distinguished the De Anza decision by noting that the parties in De Anza “…agreed that the statute of limitations began to run when the date of the first installment payment was due.” Ortiz v. Trinity Fin. Servs. LLC, 98 F. Supp. 3d 1037, 1042 (D. Ariz., 2015). The Court then opined that where a debt is payable in installments, the six year limitation period begins to run on the due date of “…each matured but unpaid installment…”. Navy Federal Credit Union v. Jones, 187 Ariz.. 4983, 930 P.2d 1007, 1009 (Ariz. App. 1996). Accordingly, defaulted installment payments older than six years might be barred, but defaulted installment payments less than six years are not barred. So, even though De Anza interprets that mortgage foreclosures are constrained to the six year limitation period under A.R.S. § 12-548, if one or more of the installment payments are less than six years old, foreclosure is still an option (although arguably not as to the defaulted payments that are more than six years old).

Where a mortgage on real property cannot be sued upon or foreclosed upon, it remains valid for a period of time thereafter. A.R.S. Title 33 identifies different time frames where such a mortgage remains in place. If the property is sold or refinanced during that time, the debt will need to be paid in full. If the property is sold outside of those time frames, the mortgage will be statutorily deemed as expired.


  • A.R.S. § 12-548 places a limitation of six years on both breach of the note (i.e. contract) and upon the time to bring a foreclosure action for a note secured by real property.
  • After the limitations period has expired, the right to the debt remains and the lien remains in place for ten years after final payment date is due (in most cases).

End notes:
(A.R.S. § 12-816 dealing with Deeds of Trust is explicit that a trustee’s sale of trust property under a trustee deed shall be commenced within the limitations period for a contract, i.e. six years)

(This article does not address those mortgages which are not based on state law. For instance, SBA loans are governed by federal law. See e.g., In re Mongello, 171 .R. 662 (Bankr. Ariz., 1994))

If you or someone you know has questions regarding mortgages, creditors’ rights and collection actions, or any real estate matter, call our office today to schedule a consultation with Bryan Eastin or Christopher Charles.

Bryan L. Eastin is an Attorney with Provident Law® practicing in the areas of trust and estate administration and litigation, guardianships and conservatorships, and real estate. Bryan’s practice includes representation of private fiduciaries appointed by the court to serve as guardians, conservators, personal representatives and/or as trustees. Bryan is admitted to practice in Arizona’s state and federal courts, and he is currently a member of the Arizona State Bar Association and Maricopa County Bar Association. He can be reached via email at

Christopher J. Charles is the founder and Managing Partner of Provident Law®. He is a State Bar Certified Real Estate Specialist and a former “Broker Hotline Attorney” for the Arizona Association of REALTORS® (the “AAR”). Mr. Charles holds the AV® Preeminent Rating by the Martindale-Hubbell Peer Review Ratings system which connotes the highest possible rating in both legal ability and ethical standards. He serves as an Arbitrator and Mediator for the AAR regarding real estate disputes; and he served on the State Bar of Arizona’s Civil Jury Instructions Committee where he helped draft the Agency Instructions and the Residential Landlord/Tenant Eviction Jury Instructions.

Christopher is a licensed Real Estate Instructor and he teaches continuing education classes at the Arizona School of Real Estate and Business. He can be reached at or at 480-388-3343.


Co-author: Bryan Eastin

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