By s8(1) LA 1980, the limitation period for a mortgage under deed is 12 years 'from the date on which the cause of action accrued'. But, what does that mean? It could, for instance, mean the date when the borrower first defaulted; or the date when the mortgage company gets possession; or the date when it subsequently sells the property. However, the HL has now clarified the position by saying that it refers to the date when the borrower first defaults on the monthly instalments. Accordingly, a building society that started proceedings 11 years and 362 days (!) after a forced sale was out of time, because the limitation period ran from the date of first default.

However, an article in the NLJ looks at another aspect of these limitation problems that was not addressed by the HL in this case. Under s29 LA 1980, time can run from the date on which a debtor 'acknowledges' the creditor's claim or makes a part payment. What this can mean is that the contents of a defence to mortgage possession proceedings can amount to an 'acknowledgment', which then means that the 12-year period runs from that date. Whilst this is a complex area, it seems that a defence that denies liability cannot be an 'acknowledgment', whilst one that does admit liability (but disputes the figures) can be an 'acknowledgment' that starts time running again. Thus, when looking at limitation periods in old mortgage claims, it may be important to look at the wording of any defence submitted by the borrower to see whether that could amount to an s29 'acknowledgment' - and thus give rise to a fresh 12-year period. For a commentary on West Bromwich BS v Wilkinson [2005] UK HL 44 (and a discussion of the s29 contention) see [2005] NLJ 1154. © Practical Lawyer