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Court Finds Statute of Limitations Expired on an Allegedly Fraudulent Transfer

Legal claims should be pursued promptly. This is especially true where the claim involves a conveyance of real property that has been publicly recorded. Delay may lead to loss of rights if evidence or witnesses become unavailable in the interim, or if the property is re-conveyed. Delay may also be disastrous if the statute of limitations expires, as occurred in Alexander v. Simpson, Index No. 71884/2020, 2021 NYLJ LEXIS 420 (Sup. Ct. Queens Co. May 7, 2021).

The plaintiff alleged that defendant fraudulently transferred ownership of a parcel and sued for breach of contract, breach of fiduciary duty, constructive trust, and unjust enrichment. Defendants moved to dismiss arguing that all the claims were time-barred. New York’s statute of limitations for constructive trust, breach of contract and unjust enrichment is six years and for breach of fiduciary duty typically three years. Here, the parties did not dispute the applicable time periods, but from when they started to run. The allegedly wrongful transfer took place in 2009, and if the time periods began to run from 2009, the action would be time-barred. Plaintiff contended he did not learn of the transfer until 2016 and argued that the statute should not start running until then.

The court granted defendants’ motion to dismiss. The deed had been publicly recorded and defendants had not done anything that would have prevented plaintiff from learning of the transfer and challenging it on a timely basis. Significantly, the plaintiff did not allege that the deed was a forgery, a claim on which there is generally no statute of limitations under New York law.

Many jurisdictions offer free services that inform a property owner or lender if a property transfer has been recorded. While these services will not prevent fraud in advance, they can help by providing prompt notice of an improper transfer, allowing a defrauded party to quickly dispute the transfer and seek to trace the funds. Your real estate attorney or title professional should be able to help you locate this resource if it is available in your area.