Statute of Limitations Runs From When Contract is Signed, Not When it is Dated

On March 9, 2017, the First Department issued a decision in Natixis Real Estate Capital Trust 2007-HE2 v. Natixis Real Estate Holdings, LLC, 2017 NY Slip Op. 01796, holding that the statute of limitations on a claim for breaches of representations and warranties accrues when the contract is signed, not when it is dated, explaining:

We next examine Natixis's argument that the entire action must be dismissed as untimely commenced. A breach of contract cause of action generally must be commenced within six years of the breach. Natixis contends that this action is time-barred because the PSA is dated "as of April 1, 2007," but plaintiff did not sue until April 30, 2013, i.e., more than six years later. This type of argument has been rejected by this Court.

This Court has held that a claim for breach of warranty accrues at the time the contract is executed, not on its "as of" date.

Here, the PSA was executed on April 30, 2007. The Trust at issue closed on April 30, 2007. Moreover, the PSA defines "Closing Date" as April 30, 2007. Thus, April 30, 2013 (the date plaintiff commenced this action) was the last day on which plaintiff could sue, and the action is therefore timely.

Natixis sets forth no convincing reason why this Court should depart from stare decisis. On the contrary, this Court's rationale in U.S. Bank N.A. makes perfect sense:

The claim cannot accrue earlier [than the date the contract is executed], because until there is a binding contract, there can be no claim for breach of warranty. Additionally, in the residential mortgage-backed securities . . . context, . . . the claim cannot generally accrue before the contract, because the trust that is the recipient of the representations and warranties typically does not come into existence prior to the closing of the transaction. Furthermore, the representations and warranties were made as of the closing date."

(Internal citations omitted).