Statute of Limitations on Note Under Seal -  March 8, 2013


Yesterday the Massachusetts Supreme Judicial Court issued an important decision concerning the applicable statute of limitations affecting suits for the enforcement of promissory notes.


Most promissory notes and other loan documents are signed under "seal;" a formality derived from English law attesting to the authenticity of the instrument. Seals were traditionally impressions upon wax, but today are simply references to the word "seal" in conjunction with the instrument's execution.


Under Massachusetts law, contracts under seal are subject to a 20 year statute of limitations.


A "major overhaul" of the Uniform Commercial Code was enacted by the Massachusetts Legislature in 1998. Among the changes was the adoption of a provision which imposed a 6 year statute of limitations on the enforcement of negotiable instruments - a variety of commercial contracts which includes promissory notes.


The question addressed by the SJC in Premier Capital, LLC v KMZ,Inc. was whether the 20 year statute of limitations continued to apply to promissory notes which were signed as sealed instruments.


The Court determined that the new 6 year statute of limitations applies to actions for the enforcement of any promissory note which accrues after the effective date of the revised UCC in 1998.  The 20 year statute of limitations continues to apply to actions for the enforcement of sealed promissory notes which accrued prior to that date.


Importantly, this decision only limits actions for the enforcement of negotiable instruments. It does not impact the enforcement of other provisions of loan agreements signed under seal.