Can Your Lawsuit Survive a Defense of Statute of Limitations in Contesting a Deed Transfer in New York

The statute of limitations in contesting a deed transfer depends on the reason for contesting and the unique circumstances of each case. Statute of Limitations is a very sensitive subject. It’s best to file a lawsuit right away, so that you will not miss any deadlines and not jeopardize your chance of having a valid lawsuit. But what happens if it has already been more than six years since the deed transfer occurred? Here are some general guidelines as to your chances of still filing the lawsuit and surviving a statute of limitations defense in New York.

Rescission as a Remedy for Contesting Deed Transfers

When contesting a deed transfer, we usually request the court to rescind the deed. Rescission is an equitable remedy that restores the parties to their original status. The remedy of rescission is not available when one can claim damages as compensation or when the parties cannot be restored to their original status. For example, when the transferee has deeded the property to a third party who is a purchaser in good faith, one cannot claim rescission anymore because the property cannot be returned.

Grounds and Statute of Limitations for Contesting a Deed Transfer

The grounds for contesting a deed transfer will how long one has to make a claim for rescission with the courts. The usual grounds for rescinding or contesting a deed transfer are:

1. Undue influence and duress
   • Must be filed within 6 years from the time to the undue influence or duress ceased
2. Fraud
   • Must be filed within 6 years from the date fraud was committed or two years from the time the party discovered the fraud or could have discovered the fraud with reasonable diligence
3. Mistake
   • Can be mutual or unilateral
   • Must be substantial and refer to a mistake of fact and not of law
   • If unilateral: fraud or wrongful conduct must be alleged
   • Must be filed within 6 years from date mistake was committed

Void vs. Voidable Deeds and Its Effect on the Statute of Limitations

If a deed is void, it is not subject to the statute of limitations. A void deed can never transfer any rights. Examples of void deeds are forged deeds or deeds that were signed without knowing that they were actually deeds (fraud in factum).

A voidable deed is a valid deed but can be voided by court order. Deeds subject of mistake, fraud in inducement, undue influence and duress are voidable deeds.

Fraud in Inducement vs. Fraud in Factum

Fraud can render a deed void or voidable depending on the type of fraud. Fraud in factum renders the deed void from the beginning and is not subject to the statute of limitations. Fraud in inducement makes the deed simply voidable.

Fraud in inducement occurs when a person knows what he is signing is a property deed, but was induced to sign it due by fraudulent means, for example, saying that the house will go into foreclosure if the deed is not signed. In this case, the period to rescind the deed is 6 years from the time the fraud was committed or two years from the time one could have determined that fraud was committed through reasonable diligence.

Fraud in factum occurs when the party did not know the nature of the document being signed. For example, the party signs the document thinking it is an employment contract when in fact, it was a property deed. Here, there was no intent to transfer any property at all. The deed is void from the beginning and it can be questioned at any time, even beyond the statute of limitations period.

Effect of Recording the Deed in Contesting a Deed Transfer

When the deed is recorded, it serves a constructive notice to the public that another person owns it. Generally, in cases of fraud, this is the time when a party should have known with reasonable diligence that fraud was committed.

However, even if a deed is recorded, if the original owner is still in possession of the property and not ousted from it, one can argue that the recording of the deed does not serve as constructive notice because there was no reason for the original owner to suspect that he had been deprived of ownership of his own property since he was still in possession.

Contesting a deed transfer requires complex legal analysis of the unique circumstances of each case. For this reason, the assistance of a lawyer is always required to know the various options available. Should you need assistance in contesting a deed transfer, the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].