Private Lenders: Time Matters—Don’t Foreclose on an Expired Loan
What California’s new law says about statutes of limitation and how to avoid the risk
With over 23 years of experience in real estate litigation and foreclosure, one thing has always been true: the longer a lender waits, the harder it gets to enforce a loan. California’s new Civil Code § 2924.13 now lists a familiar rule as the fifth “unlawful practice”:
Conducting or threatening to conduct a foreclosure sale after the statute of limitations has expired.
This isn’t new law. If a lender tries to collect on a loan too late, a borrower already had the right to go to court and stop it. But now, this failure is formally listed as a violation under the statute—and can block a foreclosure if the loan is secured by residential property in a junior position.
So how much time does a lender have?
It depends on what kind of enforcement is involved.
For judicial foreclosure (suing in court), California usually gives 4 to 6 years, depending on the type of note and whether it has a definite due date.
For nonjudicial foreclosure, where a trustee sale happens outside of court, the rule is different:
If the maturity date is recorded in the deed of trust: 10 years
If it’s not recorded: 60 years
Still, most private money loans are short term. To avoid any confusion, the safest rule is to take action within 4 years of the borrower’s default, especially if pursuing the loan through the court system.
The takeaway: review default dates and confirm whether the maturity date is ascertainable from the recorded deed of trust. Foreclosing after time runs out won’t just fail—it may now trigger a violation under § 2924.13.
Follow along as we continue breaking down the rest of this new statute.