Statutes of Limitation Provide for Extinguishment of Your Rights (2024)

Almost all legal documents which form the backbone of lending have an applicable state law statute of limitation period after which the holder's or lender's rights under the document expire.

The best example of this is a promissory note or similar negotiable instrument. The statute of limitation period is established by each individual state. The parties cannot "contract around" the statute of limitation period.

It has been recognized for many, many years that the time period within which a promissory note is enforceable must have a set and determinate period of time once the note matures or there is a payment default. Thus, individual states have different statute of limitation periods within which the holder of the promissory note must act through the institution of litigation, acknowledgment by maker, receipt of payment, or other similar events. If you fail to act within the statute of limitation period, the promissory note and the obligation it represents are extinguished.

Thus, a statute of limitations is a time period (and time is not on your side) within which you have to enforce your rights.

I thought a few quotes would highlight this problem.

"Yesterday is a cancelled check; tomorrow is a promissory note; today is the only cash you have--so spend it wisely."
--
Kay Lyons

"Never put off till tomorrow…what you can do the day after tomorrow."
--
Mark Twain

By way of example, the statute of limitation periods for enforcement of promissory notes in the states of Alabama, Arkansas and Florida are as follows:

  • Alabama: Statute of Limitation on a Note is six (6) years. See, ALA. CODE § 6-2-34.
  • Arkansas: Statute of Limitation on a Promissory Note is five (5) years (tolled by partial payments and written acknowledgment of default). See, Ark. Code Ann. § 16-56-111.
  • Florida: Statute of Limitation on an unsecured Note is five (5) years. See, § 95.11(2)(b), FLA. STAT. Statute of Limitation on a secured Note is five (5) years. See, § 95.11 section 95.11(2)(b), FLA. STAT.

Future blogs will provide the statute of limitation periods for collection on a promissory note for the states of Georgia, Louisiana, Mississippi, Louisiana, North Carolina, South Carolina, Tennessee and Texas.

Statutes of Limitation Provide for Extinguishment of Your Rights (2024)

FAQs

What is the main purpose exception to the statute of limitations? ›

The principle exception to the statute of limitations is the discovery rule. Under this exception, the statute of limitations may be suspended for the period during which an injured person cannot reasonably be expected to discover the injury upon which a malpractice claim may be based.

Are there exceptions to the statute of limitations? ›

Each state has laws that prevent someone from being prosecuted for a crime after a certain period of time, these are known as statutes of limitations. Some states provide exceptions to their time limits—for example, if DNA evidence is discovered, the state is allowed more time to prosecute.

What is the statute of limitations in the US? ›

The statute of limitations is the time limit for filing charges against the defendant. The general federal statute of limitations for felonies stand for the proposition that the government can no longer file criminal charges for an offense once 5 years has passed.

Why is statute of limitations good? ›

The purpose of statutes of limitations is to protect would-be defendants from unfair legal action, primarily arising from the fact that after a significant passage of time, relevant evidence may be lost, obscured, or not retrievable, and the memories of witnesses may not be as sharp.

What state has no statute of limitations? ›

In a few states, such as Kentucky, West Virginia, and North Carolina, there is no statute of limitations on felony charges. A few others, including South Carolina and Wyoming, have no statutes of limitations for criminal charges at all.

What is an exception in a statute? ›

A statutory exception is a rule that says something is allowed even though it would normally be against the law. It's like getting a special permission slip to do something that's usually not allowed.

What crimes in the US have no statute of limitations? ›

A “STATUTE OF LIMITATION” is a law that prescribes a LIMIT for bringing certain kinds of legal action. The most common crime in the United States, that has NO 'statute of limitation' is the crime of MURDER. Contrast that, to Bank Robbery, which, under US Federal Law, has a statute of limitations of 5 years…

What is the discovery rule exception? ›

The discovery rule prevents the statute of limitations from running until the plaintiff discovers, or has reason to discover, the cause of action. The discovery rule applies when the plaintiff did not discover – and a reasonable person would not have discovered – that they had suffered harm.

What is the delayed discovery rule? ›

This delayed discovery rule in California allows the patient to file a medical malpractice lawsuit one year after the surgery, ensuring they have a fair opportunity to seek legal redress — even if they were not initially aware of the harm caused by the doctor's error and negligence.

Can I go to jail for something I did years ago? ›

In many states, certain crimes don't have a statute of limitations, meaning the prosecutor can file these charges at any time, even if 20, 30, or more years have passed since the crime happened. These crimes tend to be murder, treason, and rape offenses. A few states have no statutes of limitations for any felony.

Can you contract around statute of limitations? ›

By the original agreementthe parties may reduce the period of limitation to not less than one year but may not extend it. (2) A cause of action accrues when the breach occurs, regardless of the aggrieved party's lack of knowledge of the breach.

What is the highest felony in the US? ›

Federal felonies are divided into five categories: A, B, C, D and E. A crime that's a Class A federal felony is the worst, with a maximum prison term of life in prison and a maximum fine of $250,000.

How do you assert statute of limitations defense? ›

Thus, the statute of limitations defense can generally be proven either by establishing the plaintiff's actual knowledge or by showing that she failed to investigate the cause of her injury with reasonable diligence.

Who establishes statutes of limitations? ›

For civil matters, the statutes of limitation are prescribed by each state or territory jurisdiction.

Are there crimes global events that shouldn t have a statute of limitations? ›

In the international arena, the non-applicability of statutory limitations pertains to crimes that are extremely difficult to prosecute immediately after they were committed. This is particularly true of war crimes, crimes against humanity, or genocide.

What is the main purpose exception? ›

The exception: the main purpose doctrineA promise to pay the debt of another need not be in writing to be enforceable if the promisor was motivated by a desire for advantage or benefit..

What is the purpose of a statute of repose? ›

A statute of repose focuses on immunizing the alleged injuring party from long-term liability, and thus may even be based on elapsed time from an event, even if the potential cause of action cannot reasonably be discovered until a later date.

What is the main purpose doctrine? ›

“Main Purpose” Rule:

The rule stating that where a person guarantees the debt of another person in order to satisfy his own personal interests, that guarantee is enforceable even if it is not in writing.

What is the primary purpose of the Statute of Frauds? ›

The purpose of the statute of frauds is to prevent fraud or other injury. These purposes are often described as being evidentiary and cautionary. The evidentiary function of the statute of frauds is to provide documentation that a legal, binding agreement exists.

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