HOA foreclosure buyers can be outbid for 45 days after the auction
HOA foreclosure buyers can be outbid for 45 days after the auction
2026-09-09 · California · Courts
A California homeowners association's trustee sale is not over when the hammer falls. The Fourth District has held that the post-auction bidding window in Civil Code section 2924m applies to assessment-lien foreclosures — and a $60,000 winning bid was displaced by a $203,000 one afterwards.
Bird Rock Home Mortgage, LLC v. Breaking Ground, LP, No. D084138, (2025) 114 Cal.App.5th 492, was filed and certified for publication on September 16, 2025. Justice Irion wrote for Division One, with Acting Presiding Justice O'Rourke and Justice Rubin concurring.1
What happened
The Oceanside Community Association nonjudicially foreclosed its assessment lien. At the trustee's sale on April 26, 2022, Bird Rock was the high bidder at $60,000.
The trustee held bidding open under section 2924m. Breaking Ground bid $203,000 during the extended window and took the trustee's deed.
Bird Rock sued to cancel the deed, set aside the sale and quiet title. Its argument was structural: section 2924m applies to a sale under a power of sale “contained in a deed of trust or mortgage,” and an association's assessment lien arises by statute — the Davis-Stirling Act — rather than by contract. So, it said, no mortgage, no section 2924m.
Affirmed: an assessment lien is a "mortgage" here
The court held that an assessment lien created by a recorded declaration containing a power of sale qualifies as a “mortgage” for section 2924m purposes.
It reasoned from the structure of the foreclosure statutes — sections 2924, 2924f and 2924h all incorporate section 2924m — together with Civil Code sections 5675, 5700 and 5710, which create the assessment lien and make it enforceable by nonjudicial sale, and section 4205(a), under which the Act prevails over inconsistent governing documents.
It then read the purpose of SB 1079, enacted in the 2019–2020 session to curb bulk investor purchases and channel foreclosed homes toward owner-occupants, nonprofits and public entities: “Widespread default in payment of HOA assessments could lead to the same consequences the statute was intended to mitigate.”
The mechanics, as the court restated them
Finality is delayed to the earliest of:
15 days after the sale, if no eligible tenant buyer submits a notice of intent to bid; the date an eligible tenant buyer's representative matches the last and highest bid, within 15 days; or 45 days after the sale.
The section applies to trustee's sales of property containing one to four residential units.
Disposition: judgment affirmed; respondents recover costs.
What it changes for boards, managers and collection trustees
The association's own timeline extends. An association that forecloses an assessment lien cannot treat the auction as the end of the matter. Until the section 2924m window closes, the buyer is not settled, title has not passed conclusively, and the association's recovery is not fixed.
That has consequences for how a board reports the outcome, when it writes off the receivable, and when it stops treating the delinquent owner as the member of record.
Collection trustees have to run the window; the association answers if they do not. Section 2924m imposes obligations on the trustee — holding bidding open, receiving and evaluating notices of intent, determining eligibility. An association engaging a trustee to foreclose is engaging someone who must perform that process correctly. A defective sale is the association's problem as much as the trustee's.
A higher post-auction bid is good news for the association, not bad. This is worth saying plainly because the case reads as a defeat for a bidder. From the association's side, $203,000 rather than $60,000 means a materially better prospect of satisfying the lien and returning surplus to the former owner. The statute's redistribution of the property is not a cost to the association.
The one-to-four-unit limit is the boundary. Section 2924m reaches residential property containing one to four units. A foreclosure against a condominium unit will ordinarily be inside it. Commercial and larger residential parcels are not.
Investor purchasers at HOA sales now face a documented risk. The economics of bidding at association foreclosure sales have historically depended on acquiring at a steep discount to value. A 45-day window in which an eligible bidder may match or exceed the price changes that calculation, and bidders who have not adjusted are exposed to exactly what happened to Bird Rock.
Where this sits in the collection sequence
Nonjudicial foreclosure of an assessment lien in California is the end of a long statutory road, and the steps before it are where most associations actually get into difficulty.
The Act requires the association to satisfy the pre-lien notice requirements, record the lien correctly, and observe the delinquency thresholds before it may foreclose at all. Section 5720 restricts nonjudicial foreclosure of an assessment lien to debts of at least $1,800 in delinquent assessments, exclusive of certain charges, or assessments more than 12 months delinquent.
A defect anywhere in that chain is a defect in the sale. And that exposure may be about to grow: AB 2439, presented to the Governor on September 8, 2026, would require an association that fails to comply with the lien procedures to recommence them at its own cost, make it liable for reconveyance fees and the owner's costs, and impose a $1,000 civil penalty on a third procedural failure within five years, with mandatory notice to the membership. It is not law; the Governor must act by September 30.
What to watch next
Bird Rock is published and final. It has not been disturbed: the California Supreme Court's petition conference results through September 2, 2026 record no grant of review or depublication in any common interest development matter — every petition this year was denied.
The open question the decision does not reach is what happens when a trustee gets the window wrong. The court had no occasion to decide the consequences of a sale conducted without the extended bidding period, and an association whose trustee closes at the auction has an exposure that Bird Rock identifies without resolving.
Related California HOA Topics
- Bird Rock Home Mortgage, LLC v. Breaking Ground, LP, No. D084138 — slip opinion, Court of Appeal, Fourth Appellate District, Division One (certified for publication) ↩
- CourtListener opinion record — Bird Rock Home Mortgage v. Breaking Ground, (2025) 114 Cal.App.5th 492 ↩
- Civil Code § 2924m, California Legislative Information — operative text of the post-sale bidding window ↩
- AB 2439, California Legislature — bill status (lien procedure penalties, presented to the Governor September 8, 2026) ↩
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