Hawaiʻi Supreme Court Clarifies a 20-Year Statute of Limitations for Mortgage Foreclosures

Introduction

In The Bank of New York Mellon v. White, SCWC-21-0000400 (Aug. 7 2025), the Hawaiʻi Supreme Court resolved a long-standing ambiguity surrounding the time within which a mortgagee must file a judicial foreclosure action. The Court held that a foreclosure action must be commenced within twenty years of the date the cause of action accrues, applying Hawaiʻi Revised Statutes (HRS) § 657-31, the statute governing actions “to recover possession of any lands, or make any entry thereon.”

The decision harmonises early twentieth-century territorial precedents with modern foreclosure practice and rejects arguments that foreclosure actions are governed by the six-year limitation for contract debts (HRS § 657-1) or by recent takings-law precedents. By choosing the longer period, the Court confirmed that foreclosure is treated first and foremost as a recovery of a real-property interest rather than mere debt collection.

Summary of the Judgment

• Holding: Mortgage foreclosure actions in Hawaiʻi are subject to a twenty-year statute of limitations under HRS § 657-31.
• Main Issue: Whether a foreclosure action is more analogous to a debt action (six-year limit under § 657-1) or to a real-property action (twenty-year limit under § 657-31).
• Court’s Answer: It is more akin to a real-property action; therefore, the twenty-year period applies.
• Result: The borrower-defendant’s statute-of-limitations defence failed, and the grant of summary judgment in favour of The Bank of New York Mellon (BNYM) was affirmed.

Analysis

Precedents Cited

1. Hilo v. Liliuokalani, 15 Haw. 507 (1904) – First recognised that foreclosure is “a remedy at law against the land,” tying it to the limitations applicable to real actions.
2. Kipahulu Sugar Co. v. Nakila, 20 Haw. 620 (1911) – Confirmed Hilo and stated that equity follows the twenty-year limitation by analogy.
3. Bowler v. Christiana Trust, 2018 WL 4659562 (Haw. App.) – The ICA concluded that § 657-31 is most analogous to foreclosure actions; relied heavily on Hilo.
4. DW Aina Leʻa Dev., LLC v. State Land Use Comm’n, 148 Hawaiʻi 396, 477 P.3d 836 (2020) – Determined that regulatory takings claims are subject to a six-year limitation, distinguishing physical takings (twenty years). Invoked by the borrower but held inapplicable.
5. Adair v. Kona Corp., 51 Haw. 104, 452 P.2d 449 (1969) – Discussed strict foreclosure under the lien vs. title theory debate; did not involve limitations.
6. Additional authorities: Bank of Am., N.A. v. Reyes-Toledo, 139 Hawaiʻi 361 (2017); Peak Capital Grp. v. Perez, 141 Hawaiʻi 160 (2017); Yokochi v. Yoshimoto, 44 Haw. 297 (1960).

The Court meticulously traced the historical line beginning with Hilo, showing that despite the passage of more than a century, the underlying reasoning – that a foreclosure’s ultimate objective is seizure or sale of land – remains unchanged.

Legal Reasoning

1. Nature of a Foreclosure Action.

• Although triggered by default on a promissory note, foreclosure seeks to enforce a mortgage, which is itself a conveyance of an interest in real property.
• Under equity principles, courts analogise to the closest statute of limitations at law; the Court identified the closest analogue as “entry upon lands.”

2. Distinction Between Note and Mortgage.

• Promissory note => personal obligation; governed by six-year § 657-1 and UCC § 3-118.
• Mortgage => security interest in land; governed by twenty-year § 657-31.
• These are “two distinct securities,” and the bar on the personal note does not automatically bar the real-property remedy.

3. Dismissal of Borrower’s Counter-Arguments.

• DW Aina Leʻa – Concerned regulatory takings, not foreclosure; its commentary on physical invasion was not dispositive.
• Adair – Addressed strict foreclosure formalities and lien theory but never ruled on limitations; therefore, it did not overrule Bowler or Hilo.
• Title vs. Lien Theory – Regardless of theory, Hawaiʻi mortgagors historically (and today) retain possession until completion of foreclosure; the underlying real-property character persists.

Impact of the Decision

The Court’s ruling will have practical and strategic consequences:

• Predictability for Lenders: Clarifies that lenders have a generous twenty-year window to bring foreclosure proceedings, reducing incentive for premature filings solely to preserve limitations.
• Borrower Defences Narrowed: Defendants can still contest standing, notice, acceleration, and equitable tolling, but the limitations defence becomes viable only in exceptional long-delay scenarios.
• Litigation Posture: Expect fewer motions to dismiss on statute-of-limitations grounds and more focus on substantive compliance with foreclosure statutes and regulations.
• Secondary-Market Stability: Investors in mortgage-backed securities gain assurance that collateral can be enforced decades after default, aligning Hawaiʻi with many title-theory jurisdictions.
• Legislative Spotlight: The Legislature may revisit HRS chapter 657 if policy makers consider the twenty-year period too long in light of consumer-protection objectives.

Complex Concepts Simplified

• Statute of Limitations – A law prescribing the maximum period for commencing a legal action after the cause arises.
• Acceleration – A contractual right enabling the lender to declare the entire loan balance immediately due upon default.
• Equitable Action – A lawsuit seeking non-monetary relief (e.g., injunction, foreclosure sale), invoking the court’s equitable powers.
• Title vs. Lien Theory – Under title theory the mortgagee holds title until payment; under lien theory the mortgagor keeps title and mortgagee holds a lien. Hawaiʻi formerly followed title theory but functionally treats mortgages as liens today.
• Right of Entry – The right of a party (here, a mortgagee) to enter land to enforce rights; historically used to classify actions involving real property.
• Strict Foreclosure vs. Foreclosure by Sale – Strict foreclosure cuts off redemption rights and vests title in the mortgagee; foreclosure by sale liquidates property and applies proceeds to the debt.

Conclusion

The Bank of New York Mellon v. White bridges historical doctrine and modern practice by reaffirming that the essence of foreclosure in Hawaiʻi is the enforcement of a real-property interest. By expressly applying the twenty-year statute borrowed from actions “to recover possession of land,” the Supreme Court has resolved confusion generated by divergent lower-court rulings and borrower defences.

Future litigants must now calibrate strategies around this extended limitation period. While it favours lenders with older default dates, it also underscores the importance of timely foreclosure to mitigate interest accrual, property deterioration, and potential equitable defences. Importantly, the ruling preserves the dual-tracking concept: a time-bar on the note does not extinguish the mortgage, preserving the mortgagee’s real-property remedy.

In the broader legal landscape, the decision confirms Hawaiʻi’s commitment to historical real-property jurisprudence, signalling that equitable foreclosure remains tethered to the land itself. Unless and until the Legislature chooses a shorter period, the twenty-year window now stands as settled law.