Bear Creek Master Ass'n v. S. Cal. Investors, Inc.
28 Cal. App. 5th 809
Cal. Ct. App. 5th2018Background
- BCMA (homeowners association) has rights under 1984 golf course Covenants, Conditions & Restrictions (GCC&Rs) to maintain adjacent golf course property and to record a "claim of lien" to secure maintenance costs; GCC&Rs were recorded in 1984 and run with the land.
- Section 3 of the GCC&Rs creates a contingent "claim of lien" that becomes an effective assessment lien only after BCMA incurs costs, gives demand, and records a claim of lien; Section 3 also declares assessment liens will have priority over subsequently created liens (with narrow exceptions). Section 4 carves out first deeds of trust as superior.
- SCI recorded a third deed of trust against the golf course in September 2013. BCMA recorded a Notice of Delinquent Assessment Lien in August 2014 after incurring maintenance costs. SCI foreclosed on its deed of trust and purchased the property at trustee's sale in July 2015.
- BCMA sued for declaratory relief asserting its assessment lien is prior to SCI's deed of trust; SCI cross‑complained seeking cancellation of the assessment lien based on priority and foreclosure extinguishment.
- Trial court entered judgment on the pleadings for SCI, cancelling BCMA's lien. The appellate court reversed, holding (1) the GCC&Rs did not create or perfect an immediate lien in 1984 and (2) the GCC&Rs’ priority/subordination clauses nonetheless made a later‑recorded assessment lien superior to non‑first deeds of trust recorded after the GCC&Rs.
Issues
| Issue | Plaintiff's Argument (BCMA) | Defendant's Argument (SCI) | Held |
|---|---|---|---|
| Whether the 1984 GCC&Rs created/perfected an assessment lien in 1984 | GCC&Rs "created a claim of lien" that took effect in 1984, so BCMA's later assessment relates back and was perfected by the 1984 recording | The GCC&Rs created only an inchoate, contingent claim of lien; an assessment lien was not created or perfected until BCMA recorded the specific notice in 2014 | The court held the GCC&Rs did not create or perfect an assessment lien in 1984; the assessment lien was created/perfected only when BCMA recorded the 2014 notice |
| Whether BCMA's 2014 assessment lien “relates back” under Civil Code § 2884 (lien for future obligations) | Section 2884 allows contractual liens to take immediate effect for future obligations, so the GCC&Rs secured future maintenance costs and relate back to 1984 | The GCC&Rs did not manifest a present, definite lien securing future advances; the instrument required later recording of a claim to create the lien | The court rejected relation‑back: § 2884 did not apply because GCC&Rs required additional contingencies and recording before a lien attached |
| Whether the GCC&Rs’ priority/subordination clauses alter default "first in time" priority | The GCC&Rs expressly provided assessment liens "shall have priority over all liens or claims created subsequent to" the declaration (except taxes and first trust deeds), so a later recorded assessment lien is superior to SCI's 2013 deed of trust | SCI relied on recording statutes and first‑in‑time priority and argued its earlier recorded deed had priority over BCMA's later recorded lien and that foreclosure extinguished the lien | The court held the GCC&Rs validly altered priority: SCI had constructive notice of the GCC&Rs and its deed of trust took subject to the covenant; BCMA's later recorded assessment lien is prior to SCI's non‑first deed of trust |
| Whether SCI's foreclosure extinguished BCMA's lien | SCI argued its foreclosure on the deed of trust extinguished BCMA's lien | BCMA argued its lien remained prior under GCC&Rs and was not extinguished as to purchaser/owner interests created to secure future assessments | The court reversed the judgment cancelling the lien, reasoning SCI was bound by the GCC&Rs' priority/subordination terms; judgment for SCI was reversed (remanding the dispute as to enforcement/cost reasonableness was not decided) |
Key Cases Cited
- Tapia v. Demartini, 77 Cal. 383 (mortgage securing future advances can bind subsequent encumbrancers)
- Oaks v. Weingartner, 105 Cal.App.2d 598 (recorded mortgage may secure unspecified future advances if instrument provides for them)
- Thaler v. Household Finance Corp., 80 Cal.App.4th 1093 (recording statutes govern perfection/constructive notice; Davis‑Stirling assessment lien rules apply only to separate interests)
- Citizens for Covenant Compliance v. Anderson, 12 Cal.4th 345 (CC&Rs enforceable as covenants running with the land)