The Maryland Court of Special Appeals recently affirmed a lower court and held that there is no statute of limitations for foreclosure actions in Maryland. See Daughtry v. Nadel, 2020 WL 7392787 (Md. Ct. Spec. App. Dec. 16, 2020). The borrowers purchased a property in 2007 and executed a mortgage to the lender. In 2012, the borrowers defaulted. In March 2019, the lender brought this foreclosure action. The borrowers filed a motion to dismiss, arguing that the action was untimely. The borrowers argued that a 2014 amendment exempted mortgage foreclosure actions from the 12-year statute of limitations set in § 5-102, and therefore subjected such actions to the blanket three-year statute of limitations in § 5-101. The trial court denied the motion.
On appeal, the Court affirmed. First, the Court held that it had issued a decision in 1947 in which it found that "[t]here is no Statute of Limitations in Maryland applicable to foreclosure of mortgages." Cunningham v. Davidoff, 188 Md. 437 (1947). Second, the Court found that the enactment of § 5-101 in 1973 did not change that holding, in part because "§ 5-101 has been expressly limited in application to a 'civil action at law'" and that "[f]oreclosure proceedings are not actions at law because they are 'equitable in nature.'" Likewise, the legislative history of § 5-102 indicated that there was no intention for it to cover foreclosure actions. Third, the Court found that the 1984 merger of law and equity in Maryland by the adoption of Rule 2-301, which provides, "[t]here shall be one form of action known as 'civil action,'" did not affect Cunningham, because "the merger of law and equity did not erase distinctions between defenses to actions sounding at law and those sounding in equity." Finally, the Court found that the 2014 amendment to these statutes did not "carve[] mortgage foreclosure actions out of the 12-year statute of limitations in § 5-102, thereby necessarily subjecting them to the three-year blanket statute of limitations in § 5-101" because "the 12-year statute of limitations never applied to mortgage foreclosure actions in the first place."
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