Equitable Lien/Equitable Mortgage Claims Accrue No Later Than Recording of the Instrument Creating (or Publicly Revealing) the Defect, and Are Barred After Six Years

1. Introduction

Citibank, N.A. v Cabello (2026 NY Slip Op 02818 [249 AD3d 679] [2d Dept May 6, 2026]) is a mortgage-foreclosure-related decision in which the Appellate Division, Second Department, reversed Nassau County Supreme Court orders that had revived the lender’s case on renewal after an intervening change in law concerning RPAPL 1304 notices.

The plaintiff (Citibank, N.A., as assignee) sued to (1) expunge an allegedly erroneous recorded satisfaction of a consolidated mortgage, (2) foreclose the consolidated mortgage, and (3) in the alternative, foreclose an equitable lien against the property. After the first two causes were dismissed and the trial court later granted renewal and summary judgment on the equitable-lien theory, the borrowers (Antonette and Rodolfo Cabello) appealed.

The key appellate issues became: (a) whether renewal was procedurally timely, and (b) whether the lender’s alternative equitable-lien/equitable-mortgage theory was time-barred under the six-year statute of limitations.

2. Summary of the Opinion

The Second Department held:

  • The lender’s renewal motion, made before final judgment, was timely.
  • Nevertheless, the lender’s alternative cause of action to foreclose an equitable lien was barred by the six-year statute of limitations (CPLR 213[4]).
  • The limitations issue could be considered for the first time on appeal because it was a pure issue of law appearing on the face of the record and could not have been avoided with earlier litigation steps.
  • The equitable-lien claim accrued no later than March 2008, when the allegedly erroneous satisfaction of the consolidated mortgage was recorded; because suit was filed in March 2019, the claim was untimely.

The court therefore reversed the December 12, 2023 orders insofar as appealed from, denied renewal, and reinstated the October 12, 2022 order denying the lender’s equitable-lien summary-judgment relief and granting the borrowers’ dismissal motion.

3. Analysis

3.1. Precedents Cited

(a) Timeliness of renewal before final judgment

  • U.S. Bank N.A. v Hirschman (240 AD3d 725, 726 [2025]) — Cited for the proposition that a motion made prior to entry of final judgment can be timely; the Second Department used it to reject the borrowers’ procedural timeliness attack on renewal.
  • Dinallo v DAL Elec. (60 AD3d 620, 621 [2009]) and Glicksman v Board of Educ./Cent. School Bd. of Comsewogue Union Free School Dist. (278 AD2d 364, 365-366 [2000]) — Reinforced that pre-judgment post-order motion practice (including renewal) may be entertained as timely.
  • Opalinski v City of New York (205 AD3d 917, 919 [2022]) (cited with “cf.”) — Used as a contrast case, signaling that different procedural posture or constraints may make similar relief unavailable, but not on these facts.

(b) Reaching new issues on appeal (pure issues of law)

  • Olim Realty v Lanaj Home Furnishings (65 AD3d 1318, 1320 [2009]) and Deltoro v Arya (305 AD2d 628, 628-629 [2003]) — Supported the court’s ability to consider the statute of limitations argument even if not preserved below, because it was a legal issue apparent on the record and not “avoidable” by earlier factual development.

(c) Statute of limitations for equitable mortgage/equitable lien theories and accrual

  • Deutsche Bank Natl. Trust Co. v Weinfeld (227 AD3d 662, 663 [2024]) — Quoted for two core propositions: (1) equitable mortgage/equitable subrogation lien-establishment claims are governed by a six-year limitations period, and (2) accrual occurs when the subject note and mortgage were made.
  • Wells Fargo Bank, N.A. v Green (227 AD3d 842, 843 [2024]) — Reinforced both the six-year rule and the alternative accrual framing tied to recording (i.e., accrual when the note and mortgage were recorded); the Second Department relied on Green to fix accrual “no later than” the recording of the erroneous satisfaction.
  • Wells Fargo Bank, N.A. v Burke (155 AD3d 668, 670 [2017]) — Cited for the accrual rule that equitable mortgage accrues when the note and mortgage were made, supporting a strict, early accrual benchmark.

(d) Change in RPAPL 1304 law prompting renewal, but not outcome-determinative on appeal

  • Bank of Am., N.A. v Kessler (202 AD3d 10 [2021], revd 39 NY3d 317 [2023]) — The Supreme Court’s October 12, 2022 dismissal was grounded in this Court’s earlier, stricter RPAPL 1304 view (that “additional language or material” could invalidate the 90-day notice).
  • Bank of Am., N.A. v Kessler (39 NY3d 317 [2023]) — The Court of Appeals later held that “concise and relevant” additional information does not void an otherwise proper 90-day notice; this change supplied the plaintiff’s asserted basis for renewal. The Second Department, however, resolved the appeal on statute-of-limitations grounds, rendering the RPAPL 1304 dispute non-dispositive.

3.2. Legal Reasoning

(a) Renewal was procedurally available, but could not overcome a time bar

The court first separated procedural permissibility from substantive viability. It accepted that renewal can be sought before final judgment (citing U.S. Bank N.A. v Hirschman and others). But renewal does not rescue a claim that is independently barred as a matter of law.

(b) The equitable-lien/equitable-mortgage claim is governed by CPLR 213(4)’s six-year period

Framing the third cause of action as one “seeking to establish a lien pursuant to the doctrine of equitable mortgage or the doctrine of equitable subrogation,” the court applied the six-year statute (via Deutsche Bank Natl. Trust Co. v Weinfeld and Wells Fargo Bank, N.A. v Green).

(c) Accrual occurs when the operative instruments are made/recorded—here, no later than recording of the erroneous satisfaction

The plaintiff argued for a later accrual point. The Second Department rejected that position and reiterated that accrual begins “when the subject note and mortgage were made” (Deutsche Bank Natl. Trust Co. v Weinfeld; Wells Fargo Bank, N.A. v Burke) or, alternatively, when recorded (Wells Fargo Bank, N.A. v Green).

Applying those rules, the court held accrual occurred no later than March 2008, when the “allegedly erroneous satisfaction of the consolidated mortgage was recorded.” Recording is pivotal because it is a public act that fixes the alleged defect (or at minimum publicly memorializes the event giving rise to the need for equitable relief). Since the action was not commenced until March 2019, the six-year period had expired.

(d) The limitations issue could be raised for the first time on appeal

Even though the procedural path below focused heavily on RPAPL 1304 and renewal after Bank of Am., N.A. v Kessler (39 NY3d 317 [2023]), the Second Department reached the statute-of-limitations issue as a pure legal issue on the record (citing Olim Realty v Lanaj Home Furnishings and Deltoro v Arya).

3.3. Impact

  • Strict temporal limits on “equitable” salvage theories: The decision underscores that equitable lien/equitable mortgage claims are not open-ended remedial backstops; they are tightly constrained by CPLR 213(4).
  • Recording events can start (or conclusively mark) the clock: By pegging accrual “no later than” the recording of an erroneous satisfaction, the court signals that lenders must treat recording anomalies as immediate litigation-risk events requiring prompt action.
  • Renewal after a favorable change in law is not enough if another dispositive defense exists: Even though Bank of Am., N.A. v Kessler (39 NY3d 317 [2023]) softened RPAPL 1304 invalidation arguments, lenders must still clear independent hurdles such as limitations.
  • Appellate posture matters: The willingness to reach limitations for the first time on appeal increases the likelihood that foreclosure-related appeals may be decided on threshold legal defenses even when trial-court proceedings focused on different grounds.

4. Complex Concepts Simplified

  • Equitable lien / equitable mortgage: A court-created security interest imposed to prevent unjust enrichment when formal mortgage documentation is defective, missing, or otherwise ineffective. It is “equitable” because it is based on fairness, but it is still subject to statutes of limitation.
  • Equitable subrogation: A doctrine allowing a lender who paid off another lien to step into the prior lienholder’s priority position to the extent of the payoff, again typically invoked to avoid unjust enrichment.
  • Statute of limitations (CPLR 213[4]): A deadline—here, generally six years—for bringing certain mortgage- and lien-related claims. Missing the deadline usually ends the claim regardless of its merits.
  • Accrual: The moment the limitations clock starts. For these equitable lien theories, the Second Department treated accrual as tied to the creation/recording of the relevant instruments—here, at the latest, the recording of the satisfaction alleged to be erroneous.
  • Renewal: A motion asking the same court to reconsider a prior order based on new facts or a change in law. It cannot cure a claim that is time-barred.
  • RPAPL 1304 90-day notice: A pre-foreclosure notice requirement for certain home loans. The underlying proceedings debated whether “extra” language invalidated the notice, an issue affected by Bank of Am., N.A. v Kessler (39 NY3d 317 [2023]).

5. Conclusion

Citibank, N.A. v Cabello reinforces a decisive limitations rule: a claim to foreclose an equitable lien under equitable mortgage/subrogation principles is governed by a six-year statute of limitations, and accrual begins when the relevant note and mortgage are made or recorded—here, no later than the recording of an allegedly erroneous satisfaction. The case illustrates that even when a lender obtains a favorable intervening change in RPAPL 1304 law and seeks renewal, the litigation can still fail on a separate, dispositive threshold defense: timeliness.