An owner had defaulted on the association’s assessments, so the trustee and agent for the association recorded a notice of delinquent assessment, a notice of default and election, and a notice of trustee’s sale. The unpaid association assessments and estimated sale costs totaled $37,763.21.

Bird Rock Home Mortgage, LLC submitted the highest bid at the trustee’s sale and tendered $60,000 to the association. However, the check was not deposited, and no deed was ever issued to Bird Rock. Rather, the bidding was kept open for an additional 45 days under Civil Code section 2924m. During this extended bidding period, Breaking Ground, LP submitted the highest bid at $203,000. The association issued a trustee’s deed upon sale to Breaking Ground, and returned Bird Rock’s $60,000 check, which Bird Rock refused to accept. 

In an effort to set aside the sale to Breaking Ground, Bird Rock filed a quiet title and declaratory relief against Breaking Ground, alleging Section 2924m did not apply to the lien for unpaid assessments. The trial court held Section 2924m applied to the trustee’s sale to enforce the assessment lien. The trial court further held a lien for unpaid assessments, authorized by its governing documents, qualifies as a “mortgage” for purposes of the nonjudicial foreclosures, thus validating the extended bidding period and the sale and deed delivery to Breaking Ground.

Bird Rock appealed. Upon review, the appellate court affirmed the trial court’s judgment, holding Section 2924m applies to such sales when the property contains one to four residential units, and the sale is conducted under a power of sale contained in a mortgage. The appellate court further held there is no conflict between Section 2924(m) and the Davis-Stirling Common Interest Development Act regarding nonjudicial foreclosures; both can operate together. The judgment in favor of Breaking Ground was affirmed, and respondents were awarded costs on appeal.

TAKEAWAY: This case confirms that the extended bidding period under Civil Code section 2924m applies not only to mortgage/trust deed foreclosures but also to community association assessment lien sales.