Relation-Back Allows Adding an Omitted Titled Owner in Foreclosure When United in Interest and on Notice

Introduction

In BAC Home Loan Servicing, LP v MacPherson (2026 NY Slip Op 03285), the Appellate Division, Second Department addressed whether a mortgage-foreclosure plaintiff may amend a long-pending complaint to add a corporation that allegedly held title to the property at the time the action commenced, notwithstanding the passage of time and a prior order denying an extension of time to serve that corporation.

The plaintiff, BAC Home Loan Servicing, LP (formerly Countrywide), commenced a foreclosure action in 2007 against, among others, Donald MacPherson. A judgment of foreclosure and sale was entered in 2017. The corporation Creative Forms, Inc. (CFI) later moved to vacate the judgment under CPLR 5015(a)(4), asserting it was the titled owner as of commencement and had never been named. The judgment was vacated.

After an unsuccessful attempt to obtain an extension of time to serve CFI under CPLR 2004 and 306-b, the plaintiff instead sought leave to amend under CPLR 3025(b) to add CFI as a defendant, relying on the relation-back doctrine under CPLR 203(c) and (f). The Supreme Court granted the motion, and CFI appealed.

Summary of the Opinion

The Second Department affirmed the orders granting leave to amend to add CFI as a defendant. The court held:

  • The appellate court was not constrained by the law of the case argument premised on the earlier (January 2020) denial of an extension of time to serve CFI.
  • The amendment was permissible because the plaintiff satisfied the three-part relation-back test: same transaction, unity of interest/notice without prejudice, and “mistake” as to proper parties (not necessarily an excusable mistake).
  • CFI failed to carry its burden to show the kind of significant prejudice that defeats an otherwise proper amendment.

Analysis

Precedents Cited

Lacanfora v Tully

The court relied on Lacanfora v Tully (241 AD3d 667, 669 [2025]) for two key points: (1) the Appellate Division “is not bound” by law of the case in the manner urged by CFI; and (2) “the linchpin” of relation-back is whether the new defendant had notice within the limitations period. Lacanfora also supported the court’s acceptance that the “same conduct, transaction, or occurrence” prong was met.

LaSalle Bank N.A. v Abedin

LaSalle Bank N.A. v Abedin (236 AD3d 773, 776 [2025]) supplied the baseline standard under CPLR 3025(b): leave to amend should be freely given unless the amendment is palpably insufficient, prejudicial/surprising, or patently devoid of merit. That framing positioned the dispute as primarily about limitations and prejudice—issues addressed through relation-back.

Bisono v Mist Enters., Inc.

Bisono v Mist Enters., Inc. (231 AD3d 134, 140-141 [2024]) was used to connect amendment practice to limitations: adding a time-barred party is “patently devoid of merit” unless saved by relation-back, and relation-back is a statutory doctrine under CPLR 203(c) and (f).

Buran v Coupal

Buran v Coupal (87 NY2d 173, 176-181 [1995]) provided the foundational relation-back test and its policy orientation. Critically, Buran establishes that New York requires only “mistake—not excusable mistake”—and it cautions against tactical omissions intended to “game the system.” The Second Department applied Buran to conclude that CFI, as alleged titled owner of the mortgaged property, should have understood its omission as an oversight rather than a strategic ploy.

OneWest Bank N.A. v Muller

OneWest Bank N.A. v Muller (189 AD3d 853, 855-856 [2020]) was cited for the three-prong formulation of relation-back (same occurrence; united in interest with notice/no prejudice; knew or should have known but for mistake) and for emphasizing the notice/prejudice inquiry within the unity-of-interest prong.

Castagna v Almaghrabi

Castagna v Almaghrabi (117 AD3d 666, 667 [2014]) supported the court’s finding of unity of interest: because MacPherson owned CFI and served as its CEO when the action began, the corporate entity and its principal could be treated as aligned such that notice to the principal could be imputed to the corporation for relation-back purposes.

Matter of Nemeth v K- Tooling

The court drew heavily from Matter of Nemeth v K- Tooling (40 NY3d 405, 410-414 [2023]) to broaden what qualifies as a “mistake” under prong three. Nemeth clarifies that relation-back is “not limited” to uncertainty about identity or status; it can apply where the omission results from “simple oversight” or a “mistake of law,” including failure to recognize a party as legally necessary. Applying Nemeth, the court held CFI could not reasonably interpret its omission—given its ownership of the foreclosed property—as anything other than an oversight, and there was no record evidence of tactical omission.

Flowers v Mombrun; Shields v Darpoh; Redd v Village of Freeport

The court relied on Flowers v Mombrun (212 AD3d 713, 715 [2023]), quoting Shields v Darpoh (207 AD3d 586, 587 [2022]), for the principle that “mere lateness” does not bar amendment; it must be lateness plus “significant prejudice.” It then cited Redd v Village of Freeport (150 AD3d 780, 781 [2017]) for the allocation and meaning of the prejudice burden: the opponent must show it was hindered in preparing its case or prevented from taking measures supporting its position. On that standard, CFI did not demonstrate prejudice sufficient to defeat amendment.

Legal Reasoning

  1. Law of the case did not foreclose appellate review of amendment. CFI argued the earlier January 2020 order (denying extra time to serve CFI because it “would be prejudiced”) controlled. The Second Department, citing Lacanfora v Tully, explained it would consider the merits of the later motion to amend. Practically, the court treated the amendment-and-relation-back analysis as its own inquiry rather than being conclusively dictated by the earlier service-extension ruling.
  2. CPLR 3025(b) favors amendment absent prejudice or lack of merit. Under LaSalle Bank N.A. v Abedin, leave is freely given unless the proposed amendment is insufficient, prejudicial, or meritless. Because the key “merit” objection was limitations, the court moved to relation-back.
  3. Relation-back satisfied all three prongs.
    • Same transaction/occurrence: CFI conceded this prong; the claim against CFI arises from the same mortgage and foreclosure.
    • United in interest + notice/no prejudice: The plaintiff showed CFI was owned and run by MacPherson at commencement, establishing unity of interest (supported by Castagna v Almaghrabi). This relationship permitted charging CFI with notice of the action so it would not be prejudiced defending on the merits (consistent with OneWest Bank N.A. v Muller and the “linchpin” notice focus highlighted in Lacanfora v Tully).
    • Mistake: Using Buran v Coupal and Matter of Nemeth v K- Tooling, the court held the plaintiff needed to show only “mistake,” including oversight or mistake of law, not an excusable mistake. Given CFI’s role as titled owner of the mortgaged property, it should have known it would have been named but for such an oversight, and the record did not suggest tactical omission.
  4. No “significant prejudice” shown. Even with substantial delay, amendment is not barred without a concrete showing of prejudice. Under Flowers v Mombrun, Shields v Darpoh, and Redd v Village of Freeport, CFI bore the burden to show hindered preparation or lost opportunities. The court concluded CFI did not meet that burden.

Impact

  • Foreclosure practice: The decision strengthens a foreclosure plaintiff’s ability to add an omitted titled owner after commencement where the omitted owner is closely aligned with a named defendant (e.g., principal/closely held entity) and can be charged with timely notice. That reduces the likelihood that title transfers within a borrower-controlled structure will defeat foreclosure solely on party-joinder timing.
  • Relation-back doctrine: The opinion reinforces a modern, notice-centered application of relation-back—especially prong three—by adopting Matter of Nemeth v K- Tooling’s expanded view that “mistake” includes oversight or mistake of law, not just identity confusion.
  • Prejudice standard: By reiterating that “mere lateness” is insufficient and placing a real evidentiary burden on the opponent, the decision encourages litigants opposing amendment to articulate concrete litigation harms (lost witnesses, unavailable records, foreclosed defenses), not generalized delay-based complaints.
  • Interplay with prior procedural rulings: Although not formally resolving every nuance between service-extension prejudice and amendment prejudice, the decision signals that a prior denial under CPLR 306-b does not automatically preclude later CPLR 3025(b) relief where relation-back supplies timeliness and the opponent cannot show significant prejudice.

Complex Concepts Simplified

Relation-back doctrine (CPLR 203[c], [f])
A rule allowing claims against a newly added party to be treated as if they were filed on the date of the original complaint—if strict conditions (same occurrence, unity of interest/notice, and mistake) are met. The practical focus is whether the new party had timely notice and is not unfairly harmed.
United in interest
A relationship between an original defendant and the new defendant such that their legal interests are so closely aligned that notice to one can fairly be treated as notice to the other, and defending the case does not create an unfair disadvantage for the new party.
Mistake (prong three of relation-back)
In New York, the plaintiff need not show an “excusable” mistake. The omission can be a simple oversight or a mistaken legal judgment about who must be sued, so long as the new defendant knew or should have known it would have been sued but for that mistake.
Law of the case
A doctrine that can discourage re-litigation of issues already decided within the same case. Here, the Appellate Division emphasized it would independently examine the merits of the amendment request rather than treating the prior ruling as dispositive.
Prejudice
Not just delay. The opponent must show concrete harm to its ability to defend—such as lost evidence, unavailable witnesses, or foregone litigation steps that would have been taken if the party were timely added.

Conclusion

BAC Home Loan Servicing, LP v MacPherson confirms that, in New York, an omitted titled owner can be added to a foreclosure action by amendment under CPLR 3025(b) where the relation-back doctrine is satisfied—particularly when the owner is united in interest with a timely sued defendant and can be charged with timely notice. Drawing on Buran v Coupal and Matter of Nemeth v K- Tooling, the Second Department underscores that “mistake” is broadly construed and that amendment turns on notice and the absence of significant, demonstrated prejudice, not on mere lateness.