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Limitation and shortfall

Many years ago the bank recovered possession of the house. Unfortunately much more was owed than was obtained on the sale and the bank has now come back to haunt the borrower. It wants the shortfall. More than six years have passed since the problems arose but 12 years have not. Is the bank's claim statute barred? The main statutory provisions are contained in the Limitation Act 1980. This page looks at those provisions and the key cases that have dealt with this topic in recent years. It also deals with a case where the lender lost the right to claim possession because it failed to enforce its right for more than 12 years after it became entitled to possessoin.

Limitation Act 1980

The time limit for an action founded on simple contract is six years (s5).

The time limit for an action "upon a specialty" is 12 years (s8). A mortgage deed being under seal is a specialty (Aiken v Stewart Wrightson Members Agency Ltd [1995] 1 WLR 1281).

There are however special provisions that apply to mortgages in s20:
    20(1) No action shall be brought to recover -
      (a) any principal sum of money secured by a mortgage or other charge on property (whether real or personal) .. after the expiration of twelve years from the date on which the right to receive the money accrued.

    (5) Subject to subsections (6) and (7) below, no action to recover arrears of interest payable in respect of any sum of money secured by a mortgage or other charge or payable in respect of proceeds of the sale of the land, or to recover damages in respect of such arrears shall be brought after the expiration of six years from the date on which the interest became due.

The leading case: Bartlett

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