Statute of
Limitations
A statute of limitations is
a decree in a common legal system that sets forth the maximum
period of time, after certain events take place, within which
legal proceedings based on those events may be initiated.
In civil law systems, these provisions are usually part of the
civil code or criminal code and are often known collectively
known as 'periods of prescription' or 'prescriptive
periods'.
Applications of the Statute of Limitations
A common legal system might have a
statute limiting prosecution for crimes called misdemeanors
for up to two years. In such a situation for instance, if a
person is discovered to have committed a misdemeanor three
years ago, he or she cannot now be prosecuted for it. Or in
the case of a contract for instance, can only be sued upon for
breach of performance from six years after the contract was
agreed upon initially or partially performed.
In sharp contrast, Canada for example, has a
criminal statute of limitations period only for summary or
less serious offences. This period is for a duration of six
months from the date when the offence was carried out. Thus,
for instance, a Canadian can only be charged with an indecent
act within six months of the time of committing the offence,
unless both the Crown and the defendants agree. In the case of
indictable or more serious offences, if a hypothetical
assailant committed sexual assault for instance, the assailant
could be charged any time in the future, even if the crime
happened decades ago.
A crime in the case of a criminal prosecution or
a cause of action in a civil lawsuit is believed to have
accrued when the event beginning its time limitation occurs.
Sometimes this is the event itself that is the subject of the
law suit or prosecution such as a crime or personal injury,
but it may also be an event such as the discovery of a
condition one wishes to redress, such as discovering a defect
in a manufactured good, or else in the case of controversial
false memory syndrome cases where someone discovers memories
of childhood sexual abuse after undergoing corrective therapy
long afterwards.
An idea that is closely related, though not
identical, to the statute of limitations is a statute of
repose. This usually applies to buildings and properties, and
limits the time during which an action may lie based upon
defects or hazards connected with the construction of the
building or premises. An example of this would be that if a
person is electrocuted by a wiring defect incorporated into a
structure in, say the year 1990, a state law may allow his
heirs to sue only before the year 1997ends in the case of an
open patent defect, or before the end of the year 2000 in the
case of a hidden defect. Statutes of repose do also apply to
manufactured goods.
Manufacturers contend that these edicts are
necessary to avoid unfairness and encourage consumers to
maintain their property. Consumer groups however argue that
statutes of repose on consumer goods provide a disincentive
for manufacturers to build durable products and to notify
consumers of product defects as and when the manufacturers
become aware of them. Consumer groups also argue that such
statutes of repose disproportionately affect poorer people,
since they are more likely to own older goods and may not be
able to get true value for money.
Real Estate Statue of Limitations
In real
estate you must begin the lawsuit within a legally prescribed
time period. If you fail to initiate the lawsuit within the
time period, you may have no remedy in the courts.
Four
examples for real estate:
1) Three years to bring action
for removal of encroachments.
2) Four years to bring action
on a written contract.
3) Five years to bring action for
recovery of title to property.
4) 90 days after filling a
mechanic's lien.
Individual State of
Limitation:
When you are in
debt and cannot pay it off, a creditor legally can collect
their money from you. We all know how they do it, from letters
to phone calls asking to you to pay it off. Statue of
limitations gives creditors certain number of years to collect
their money. If they are not able to collect that money in a
certain years, legally they no longer come after you.
Let's say that you live in Alabama and you have
applied for credit card with limit of $5,000. For some reasons
you are not able to repay that money on time and you fall
behind your payment. Creditor starts to call you and send you
letters that your account is in collection. Here is a tricky
part. Creditors in this case has right to collect their money
in 6 years period, as stated in our table below. After 6 years
they can no longer come after you and it will take anywhere
2-5 additional years until negative collection will be removed
from your credit report.
Ok, now about the tricky part. How does the
creditor know when the 6 year period start? It is not
necessarily the day you applied for your credit card. It is
the day you stopped paying off your bill. But here is the
tricky part. Let's say that you got a credit card in January
2000, than in April 2000 you stopped paying your credit card.
You are in default, and this is the start of 6 years period
for creditor. Now let's say that in January 2001 you make a
payment, thinking you would like to pay it off. Well, the
6-year period is erased and starts again when you default.
This process is called "restarting a clock" as called by most
creditors.
Once you default on a credit card make sure you
fully understand statue of limitations. Our table below shows
limitations for each state.
Statue of Limitation
Table:
Oral Contract - You agree to pay money loaned to you
by someone, but this contract or agreement is verbal; i.e. no
written contract. Remember, a verbal contract is
legal.
Written Contract - You agree
to pay on a loan under terms written in a document, which you
and your debtor have signed.
Promissory Note - You have agreed to pay on a
loan via a written contract, just like the written contract.
The big difference between a promissory note and a regular
written contract is that the payments are scheduled and
interest on the loan is also spelled out in the promissory
note. An example of a promissory note is a mortgage.
Open Ended Accounts - These are revolving lines
of credit with varying balances. The best example is a credit
card account.
|
