G. Psarakis - Loan Limitation Periods: The Time Limits Borrowers and Guarantors Must Know

Legal Insight

September 2025

Giorgos Psarakis, LL.M. (mult), PgCert

(republished from Euro2day.gr)

A few years ago, we had published on the Euro2Day website certain information regarding the statute of limitations for loan claims. As we mentioned then: “a question that is frequently raised by borrowers who are called upon to settle debts after many years is the following: after how many years can the bank still pursue the amounts owed? In other words, when does the bank’s claim become time-barred?” Today, we will provide a more up-to-date overview, since several court decisions have now been issued that have further crystallized the relevant issues.

The first point a borrower should understand is that banks’ claims generally become time-barred after 20 years. In private law relations, the general limitation period is 20 years, unless otherwise provided by law. Since banking law does not set a different rule, the 20-year limitation applies, which in practice makes it nearly impossible for the debtor (borrower or guarantor) to raise a limitation defence.

However, an important detail that is often overlooked is the following: the limitation period for loan claims is 20 years, unless the loan is repayable in instalments, in which case a 5-year limitation applies, starting from the end of the year in which each instalment became due and payable. For example, if an instalment fell due in 2015, it would be time-barred on 1 January 2021. From that date onwards, any attempt by the lender to enforce payment would be successfully countered by invoking the “statute of limitations” defence. Yet even then, the 20-year rule re-applies if the loan is terminated before its contractual maturity.

In this context, three distinct situations arise in practice where the 5-year limitation applies:

a) When the contract does not provide for a termination right – although this is quite rare. One such case, for instance, concerned loans granted by a certain bank (now under special liquidation) in the framework of restructuring older debts, pursuant to Ministerial Decision No. 4216/Β/269/07.02.2001 on the settlement of livestock–poultry business debts. Those contracts contained no termination clause, only provisions for the payment of annual instalments. In many such cases, the bank delayed judicial enforcement of instalments beyond the 5-year period, which resulted in the claims being time-barred.

b) When the contract provides for a termination right, but the lender has not exercised it, or has exercised it invalidly. See, for example, recent decision No. 3878/2025 of the Athens Court of First Instance: “In the present case, however, it is likely that all instalments of the loan in question, the last of which was due on 1.12.2013, have become subject to the 5-year limitation period under Article 250(15) CC, which was completed on 1.1.2019, while the lender did not activate, through termination, the relevant clause of the loan agreement allowing it to declare the entire outstanding balance due in case of default of two or more instalments, together with default interest…” Even if termination was attempted, it must be valid; thus, in cases where, for instance, the signatories of the termination lacked due authorisation, the claims may have become time-barred (see e.g. decision No. 1194/2024 of the Athens Multi-Member Court of First Instance: “… since there is no evidence of representational authority or power of attorney given to the signatories of the termination, the said loan termination was invalid and produced no legal effect…”).

c) When the bank terminates the loan after its maturity. This is because, in order for the 5-year limitation to be converted into 20 years, termination (by serving a document through a bailiff) must take place before the contractual maturity of the loan; otherwise, it is meaningless. In simple terms: if a loan has a 5-year term and the bank terminates it in year 6, such termination is superfluous, as all instalments have already matured, and the limitation remains 5 years. As noted in decision No. 1390/2025 of the Athens Multi-Member Court of First Instance: “for a fixed-term loan to be terminated, the contractual duration must still be in force at the time of termination…”

In the above scenarios, it may at first glance seem unjustified for the debtor to be fully released from the debt. However, this outcome is required to serve the fundamental purposes of the statute of limitations, which are: on the one hand, to provide legal certainty so that obligations do not remain indefinitely pending against individuals, thereby disrupting their financial and personal planning; and on the other, to sanction the creditor for failing to act in due time to enforce its claim.