Intervention and Consolidation in Competing Real Property Encumbrance Actions: Rights under CPLR 1012(a)(3) and 602(a)

Introduction

Windward Bora, LLC (“Windward”) and Home Funds Direct (“Home Funds”) are parties to a dispute over which encumbrance—Windward’s second Frederick mortgage or Amos Financial, LLC’s (“Amos”) equitable lien—is superior as against real property situated in Brooklyn. After Windward sued under RPAPL Article 15 to quiet title and bar any claim by Home Funds, Trinity Financial Services, LLC, and RCS Recovery Services, LLC, Amos moved to intervene under CPLR 1012(a)(3) and to consolidate this proceeding with Amos’s own foreclosure action pending in Kings County (Index No. 500345/16). The Supreme Court, Kings County, granted Amos leave to intervene and to consolidate for discovery and trial. Windward appeals. The Appellate Division, Second Department, affirms.

Summary of the Judgment

On March 19, 2025, the Appellate Division unanimously upheld the lower court’s order:

Amos demonstrated a “real and substantial interest” in the outcome and was properly permitted to intervene under CPLR 1012(a)(3).
Common issues of law and fact supported consolidation of the two actions under CPLR 602(a). Windward failed to show any substantial prejudice from joint discovery and trial.
The court exercised sound discretion in both respects, and Windward’s remaining arguments were rejected as without merit.

Analysis

1. Precedents Cited

Deutsche Bank Natl. Trust Co. v. Allenstein, 201 A.D.3d 783 (2d Dep’t 2022): Intervention requires a “real and substantial interest” and timely motion.
Matter of Wasserman v. Farkas, 219 A.D.3d 1528 (2d Dep’t 2023): Reaffirmed that equitable lienholders may intervene in related proceedings.
Wells Fargo Bank, N.A. v. McLean, 70 A.D.3d 676 (2d Dep’t 2010): Reiterated CPLR 1012(a)(3) standards for intervention in property disposition litigation.
Longo v. Fogg, 150 A.D.3d 724 (2d Dep’t 2017): Consolidation under CPLR 602(a) where common questions of law or fact exist.
Brown v. Cope Bestway Express, Inc., 99 A.D.3d 746 (2d Dep’t 2012): No consolidation prejudice absent substantial rights impairment.
Viafax Corp. v. Citicorp Leasing, Inc., 54 A.D.3d 846 (2d Dep’t 2008): Consolidation avoids duplicative trials and competing rulings on the same facts.
Cromwell v. CRP 482 Riverdale Ave., LLC, 163 A.D.3d 626 (2d Dep’t 2018): Discretionary nature of consolidation decisions.

2. Legal Reasoning

Intervention: Under CPLR 1012(a)(3), a nonparty may intervene “when the action involves . . . title” and the intervenor “may be affected adversely by the judgment.” Amos held an equitable lien dating back to October 6, 2007, in the amount of $884,465.96, and faced the risk that a judgment in Windward’s Article 15 action would bar its foreclosure rights or complicate its own foreclosure suit. The court found Amos’s motion timely, its interest substantial, and its potential harm clear.

Consolidation: CPLR 602(a) permits consolidation or joint trial when actions share common questions of law or fact and no substantial prejudice results. Both the Amos action and Windward’s Article 15 action center on priority of encumbrances on the same property and on competing claims to foreclose. Windward offered no evidence of substantial prejudice. Thus, consolidation for discovery and trial was appropriate to avoid duplicative proceedings, reduce cost, and prevent potentially inconsistent rulings.

3. Impact

This decision underscores and clarifies practitioners’ ability to:

Intervene in quiet‐title or lien‐determination actions when an equitable or unrecorded interest may be impaired by a judgment;
Leverage consolidation to streamline litigation over competing property claims, especially where the same facts and legal issues recur;
Avoid the inefficiencies and risks of parallel lawsuits on mortgage priority and lien enforcement.

Lower courts and litigants will look to this ruling for guidance on the timely assertion of intervention rights and the discretionary factors governing consolidation under New York practice rules.

Complex Concepts Simplified

Equitable Lien: A court‐imposed security interest awarded to a creditor who lacks a recorded mortgage but demonstrates fairness grounds (e.g., by contract or equitable considerations).
Intervention (CPLR 1012[a][3]): A nonparty steps into ongoing litigation to protect its own interests when its rights could be impaired by the litigation’s outcome.
Consolidation (CPLR 602[a]): Combining separate actions into one proceeding when they share common factual or legal issues, to save time and avoid inconsistent decisions.
Allonge: A slip of paper attached to a promissory note reflecting an assignment of the note, often used when the note has no space for further indorsements.
Satisfaction of Mortgage: A recorded certificate that a mortgage debt has been paid off, removing the lien from public records; failure to record leaves the mortgage appearing unsatisfied.

Conclusion

Windward Bora, LLC v. Home Funds Direct cements the principle that equitable lienholders possess the right to intervene in subsequent title‐clearing litigation and to seek consolidation when overlapping issues of lien priority and foreclosure arise. By affirming both intervention under CPLR 1012(a)(3) and consolidation under CPLR 602(a), the Second Department reinforces efficient, comprehensive resolution of competing real property encumbrance claims and guards against the prejudice of divergent judgments.