EXTENDED BIDDING IN HOA FORECLOSURES (March 2026)

A recent case, Bird Rock Home Mortgage, LLC v. Breaking Ground, LP, laid to rest the question of whether extended bidding applies to non-judicial foreclosures on liens for unpaid association assessments.  The issue turned on whether association liens constitute “mortgages” for purposes of non-judicial foreclosures.  Civil Code section 2924m authorizes extended bidding in non-judicial foreclosures, allowing certain qualified bidders to submit higher bids up to 45 days after the trustee’s sale under certain circumstances.  This statute applies to, among other requirements, trustee’s sales conducted under a power of sale in a deed of trust or “mortgage.”  Civil Code section 2920 defines “mortgage” as a contract or other instrument (other than a trust deed) granting property as security for an obligation and conferring a power of sale.  The Bird Rock court held that the association lien in that case constituted a “mortgage” because the CC&Rs authorized the association to record a lien and granted the association a power of sale to enforce it.  The court rejected the argument that association liens are not the product of contract, but rather statute, namely the Davis-Stirling Common Interest Development Act.  The court viewed the CC&Rs as a contract, in turn classifying the assessment liens as a “mortgage” for purposes of the nonjudicial foreclosure.  Accordingly, under the statutorily required circumstances, extended bidding is allowed in non-judicial foreclosures of assessment liens, at least when the CC&Rs themselves authorize the lien and the foreclosure. 

Extended bidding seems to be a mixed blessing for associations.  On the one hand, it provides the possibility of a post-sale bidder paying a higher price than was bid at the trustee’s sale, increasing the chances of the foreclosure covering the full amount of the delinquent assessment.  On the other hand, in the event that it does not yield a higher price, it delays the transfer of the unit to a new owner who will pay the assessments going forward.