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To recover on an action based upon the breach of a promissory note, including the none payment thereof, the holder generally has five years from the date of the default to commence an action to recover on the note. This is provided for in Florida 95.11(2)(b) which provides that “A legal or equitable action on a contract, obligation, or liability founded on a written instrument,” which would include a promissory note, must be commenced within five years. There are various exceptions to this section. On such exception is partial payment. Florida Statute 95.051(a)(f) states that “The running of the time under any statute of limitations is tolled by: (f) [t]he payment of any part of the principal or interest of any obligation or liability founded on a written instrument.”
In layman’s terms, what does this mean? Please consider the following factual scenario. A loan was to be repaid in 84 installments. Additionally, under the note the lender’s rights upon default included acceleration of the entire unpaid principal balance, all accrued unpaid interest, costs and fees.
The borrower had a troubled payment history under the loan. Ultimately, the borrower was notified of the acceleration of the loan. After the notice of acceleration, the borrower made nine partial interest and/or principal payments to the lender. For some reason, the lender did not file suit for in excess of five years from the date of the notice of acceleration.
In response to the lawsuit, the borrower raised as an affirmative defense the fact that even though he owed the money, the claim by the lender was barred by the statute of limitations. In other words, the lender waited too long to commence the action.
The lender responded to the borrower’s position by pointing out that Florida Statute 95.11.051(1)(f) would be applicable to the factual pattern of referenced above. The court agreed and allowed the action to proceed forward.
Please keep in mind that the above information is being provided for informational purposes only. Thus, it is not designed to be complete in all material respects. There are other exceptions to the general statute of limitations applicable to written promissory notes. However, these exceptions are very fact specific. Consequently, if you are faced with a statute of limitations defense in a pending matter or is a factor you are considering before electing to file suit, you should contact a qualified professional.Contact Us
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