Filed 10/19/18; Certified for Publication 10/31/18 (order attached)




           IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                 FOURTH APPELLATE DISTRICT

                                              DIVISION TWO



BEAR CREEK MASTER
ASSOCIATION,
                                                                      E066588
      Plaintiff, Cross-defendant and
Appellant,                                                            (Super.Ct.No. MCC1500389)

v.                                                                    OPINION

SOUTHERN CALIFORNIA
INVESTORS, INC.,

      Defendant, Cross-complainant and
Respondent.




         APPEAL from the Superior Court of Riverside County. Raquel A. Marquez,

Judge. Reversed.

         The Perry Law Firm, Michael R. Perry, Larry M. Roberts, and Evan H. Goldsmith

for Plaintiff, Cross-defendant, and Appellant.

         Jackson Tidus and F. Scott Jackson for Jackson Tidus as Amicus Curiae on behalf

of Plaintiff, Cross-defendant, and Appellant.




                                                          1
       Lewis Brisbois Bisgaard & Smith, Roy G. Weatherup, Brant H. Dveirin, Edward

J. Corwin, and Allison Ann Arabian for Defendant, Cross-complainant, and Respondent.

                                   I. INTRODUCTION

       In this case, the parties dispute which of their recorded liens against a golf course

property has priority. In 2013, defendant, cross-complainant, and respondent, Southern

California Investors, Inc. (SCI), recorded a third deed of trust against the golf course

property. In 2014, plaintiff, cross-defendant, and appellant, Bear Creek Master

Association (BCMA), a homeowners association, recorded an assessment lien against the

golf course property. The trial court entered judgment on the pleadings in favor of SCI

after determining that SCI’s third deed of trust had priority over BCMA’s later-recorded

assessment lien. BCMA appeals, claiming its assessment lien has priority.

       BCMA owns and is responsible for maintaining the common areas within the Bear

Creek Development, a common interest development in Murrieta. The golf course

property is adjacent to but is not part of the Bear Creek Development. In 1984, the

developer of the Bear Creek Development and the golf course property recorded a set of

covenants, conditions, and restrictions governing the golf course property (the

GCC&R’s.) The GCC&R’s granted BCMA the right to maintain the golf course property

in accordance with the GCC&R’s, if its owner failed to do so. To this end, the GCC&R’s

granted BCMA a “claim of lien” against the golf course property to secure certain costs

that BCMA later incurred in maintaining the golf course property. After SCI recorded its




                                              2
third deed of trust in 2013, BCMA incurred costs in maintaining the golf course property

and recorded its assessment lien.

       BCMA claims its assessment lien was created by the GCC&R’s and “relates back”

to the 1984 recordation of the GCC&R’s. (Civ. Code, § 2884.) 1 We disagree.

According to the lien provisions of the GCC&R’s, the assessment lien was neither

created nor perfected until it was recorded in 2014. Nonetheless, we agree with BCMA’s

alternative claim that its assessment lien has priority over SCI’s previously-recorded third

deed of trust pursuant to the priority and subordination provisions of the GCC&R’s, even

though the assessment lien was recorded after SCI’s third deed of trust was recorded.

                              II. FACTS AND PROCEDURE 2

A. The GCC&R’s Governing the Golf Course Property

       As indicated, BCMA owns and is responsible for maintaining the common areas

within the Bear Creek Development, a common interest development comprised of 620

single-family homes and townhomes in Murrieta. The golf course property is adjacent to

but is not part of the Bear Creek Development. In the early 1980’s, Bear Creek, Ltd.

developed the Bear Creek Development and the golf course property. In February 1984,

Bear Creek, Ltd. executed the GCC&R’s, and the GCC&R’s were recorded on March 2,




       1   All further statutory references are to the Civil Code unless otherwise indicated.

       2  The facts are taken from the complaint, cross-complaint, the documents attached
to those pleadings, and judicially noticed recorded instruments.


                                               3
1984. Bear Creek, Ltd. sold the golf course property on March 2, 1984, and the grant

deed for that original sale incorporated the GCC&R’s.

       The GCC&R’s require the golf course property owner to maintain the golf course

property “in a clean and attractive condition” and grant BCMA the right, but not the

obligation, to enter upon the golf course property in order to remedy its owner’s failure to

maintain it. To these ends, the GCC&R’s created a “claim of lien” against the golf

course property in order to reimburse BCMA for certain future costs it incurred

(including interest, collection costs, and attorney fees) in maintaining the golf course

property in accordance with the GCC&R’s.

       Section 3 of article III 3 of the GCC&R’s states: “There is hereby created a claim

of lien, with power of sale, on the Golf Course Property to secure payment to [BCMA] of

any and all Assessments levied against any and all owners of the Golf Course Property

pursuant to this Declaration, together with interest thereon as provided for in this

Declaration, and all costs of collection which may be paid or incurred by the Association

in connection therewith, including reasonable attorneys’ fees. . . . [¶] . . . [¶] . . . Upon

such recordation of a duly executed original or copy of such a claim of lien, the lien

claimed therein shall immediately attach and become effective in favor of the Association

[BCMA] as a lien upon and against the Golf Course Property. . . . Any such lien may be




       3
     References to sections of the GCC&R’s are to sections of article III of the
GCC&R’s.


                                              4
foreclosed by appropriate action in court or in the manner provided by the California

Civil Code for the foreclosure of a deed of trust with power of sale . . . .”

       Section 3 further provides that an assessment lien “shall have priority over all

liens or claims created subsequent to the recordation of this Declaration [the

GCC&R’s], except for tax liens for real property taxes and assessments in favor of any

municipal or other governmental assessing unit and except for certain trust deeds as

provided in Section 4 below.” (Italics added.) Section 4 provides: “The lien for the

Assessment provided for herein shall not be subordinate to the lien of any deed of trust or

mortgage, except the lien of a first deed of trust or first mortgage . . . (such deed of trust

or mortgage being hereinafter referred to as a ‘prior deed of trust’).” 4

B. The Covenants, Conditions, and Restrictions Governing the Bear Creek Development

       The Bear Creek Development is governed by a “master” declaration of covenants

conditions, and restrictions, recorded in 1982 (the BCC&R’s). Like the GCC&R’s, the

       4  Section 4 further provides: “The sale or transfer of the Golf Course Property
shall not affect any Assessment lien created pursuant to the terms of this Declaration to
secure an Assessment due prior to, on, or after the date of such sale or transfer . . . ;
provided, however, that the sale or transfer of the Golf Course Property pursuant to a
judicial foreclosure or foreclosure by power of sale of a prior deed of trust . . . shall
extinguish any Assessment lien which has attached and become effective with regard to
the Golf Course Property prior to the time of such sale or transfer, and shall prohibit the
recordation of any Assessment which became due prior to the date of such sale or
transfer; provided, however, that there shall be a lien on the interests of the purchaser at
such sale which shall attach, be created and become effective and be foreclosed in
accordance with this Declaration and which shall secure any Assessment becoming due
after the date of any such sale or transfer. For the purpose of this Section 4, a sale or
transfer of the Golf Course Property shall occur on the date of recordation of a deed or
other instrument of title evidencing the conveyance of record title to the Golf Course
Property.


                                               5
BCC&R’s provide that BCMA shall have the right, but not the obligation, to enter upon

and maintain the golf course property in the event its owner fails to maintain it, and

grants BCMA the right, but not the obligation, pursuant to the GCC&R’s, “to levy

assessments against the Golf Course Property for the payment of such maintenance.”

The BCC&R’s provide: “Such assessments shall, pursuant to the [GCC&R’s], become a

lien against the Golf Course Property and shall have the priority and enforcement rights

set forth in the [GCC&R’s].” (Italics added.)

C. The Third Deed of Trust, Assessment Lien, and 2015 Foreclosure Sale

       On September 12, 2013, when Bear Creek Partners LLC (BCP) owned the golf

course property, SCI’s third deed of trust, securing BCP’s $350,000 promissory note to

SCI, was recorded against the golf course property. On August 29, 2014, BCMA

recorded a “Notice of Delinquent Assessment Lien” against the golf course property (the

assessment lien). The assessment lien states it was being recorded in accordance with the

GCC&R’s and section 5675 of the Davis-Stirling Common Interest Development Act

(the Davis-Stirling Act). (§§ 4000-6150.)

       Notwithstanding the reference in BCMA’s assessment lien to section 5675, the

parties and we agree that the Davis-Stirling Act does not apply to the golf course

property. Section 5675 states that an “assessment” on an owner’s separate interest within

a common interest development “shall be a lien on the owner’s separate interest . . . from

and after the time . . . a notice of delinquent assessment” is recorded. (Italics added.)

Thus, if the Davis-Stirling Act applied to the golf course property, BCMA’s assessment



                                              6
lien would be subordinate to SCI’s third deed of trust pursuant to section 5675, or former

section 1356. (Thaler v. Household Finance Corp. (2000) 80 Cal.App.4th 1093, 1099-

1100 (Thaler).) Although the Bear Creek Development is a common interest

development within the meaning of the Davis-Stirling Act (§§ 4100, 4175), the

BCC&R’s show that the golf course property is not part of the Bear Creek Development.

Thus, the golf course property is not a “separate interest” or separately owned lot, parcel,

or space, within the Bear Creek Development. (§§ 4185, subd. (a)(3), 5675.) 5

       BCMA’s assessment lien secured $171,460 through August 18, 2014, including

$168,557 for costs incurred by BCMA in replacing a parking lot and irrigation on the golf

course property. BCP did not pay the assessment lien, and in December 2014 BCMA

recorded a notice of default and election to sell the golf course property pursuant to the

power of sale granted by the GCC&R’s.

       Meanwhile, SCI instituted nonjudicial foreclosure proceedings on the third deed of

trust. A notice of sale was recorded in November 2014, stating that $1,657,084.13 was

owed on the third deed of trust and setting a trustee’s sale on December 24, 2014. Before

the noticed trustee’s sale date, BCP filed for bankruptcy, but SCI obtained relief from the



       5  At our direction, the parties submitted letter briefs addressing whether the
Davis-Stirling Act applies to the Bear Creek Development and whether the golf course
property is a separate interest within that development. In its letter brief, SCI asked us to
take judicial notice of BCMA’s articles of incorporation and the BCC&R’s. We deny
these requests as moot. The BCC&R’s are already part of the record on appeal, and show
the golf course property is not part of, or a separate interest within, the Bear Creek
Development.


                                             7
bankruptcy stay and purchased the golf course property at its postponed foreclosure sale

on July 9, 2015.

       SCI then sold part of the golf course property in a private sale, and the escrow

company for that sale, Ticor Title Company (Ticor), requested payoff demands from

BCMA and all other holders of liens against the golf course property. BCMA demanded

$475,937.60 from Ticor to pay its assessment lien in full. 6

       Ticor withheld approximately $703,000 from the escrow for SCI’s private sale,

comprised of BCMA’s $475,937.60 payoff demand plus 50 percent of that amount. SCI

posted a bond with Ticor in lieu of paying BCMA’s payoff demand for its assessment

lien through the escrow. SCI later demanded that BCMA release its payoff demand,

BCMA refused do so, and SCI advised BCMA that its assessment lien had been

extinguished in the foreclosure sale. BCMA disputes that claim.

D. The Pleadings: BCMA’s Complaint and SCI’s Cross-complaint

       1. BCMA’s Complaint

       In September 2015, BCMA filed a complaint for declaratory relief against SCI,

alleging the parties had a genuine controversy regarding the priority of BCMA’s

assessment lien over SCI’s third deed of trust. BCMA alleged its assessment lien had

priority based on the GCC&R’s, which provided that all deeds of trust except first deeds

       6  BCMA’s $475,937.60 payoff demand included $168,557 for the costs of
replacing a parking lot and irrigation on the golf course property, $16,624.80 in
“[i]nterest on [p]rincipal,” $16,090.60 in “[c]ollection costs,” $250 in “[c]losing [c]osts,”
and $291,040 in attorney fees incurred in the bankruptcy proceedings. We express no
opinion whether any of these costs were reasonably incurred.


                                              8
of trust would be subordinate to any assessment lien for maintaining the golf course

property. The complaint alleged SCI failed to pay the assessment lien after foreclosing

on its third deed of trust, and Ticor, the escrow company for SCI’s subsequent private

sale of the golf course property, would not release funds to BCMA to pay the assessment

lien without “a judgment stating that the [assessment lien] was not extinguished by

[SCI’s] foreclosure.” Thus, BCMA sought a judicial declaration that its assessment lien

was not extinguished by the foreclosure sale, that SCI’s third deed of trust was

subordinate to the assessment lien, and that BCMA was entitled to recover attorney fees

and other costs as part of its assessment lien.

       2. SCI’s Cross-complaint

       In November 2015, SCI cross-complained against BCMA, alleging SCI’s third

deed of trust had priority over BCMA’s assessment lien because it was recorded first, and

that the assessment lien was extinguished in the foreclosure sale. SCI thus sought a

judicial declaration that its third deed of trust had priority over the assessment lien, and

sought to cancel the assessment lien. The complaint includes copies of the third deed of

trust, the notice of trustee’s sale for the July 9, 2015, foreclosure sale, BCMA’s response

to Ticor’s request for a payoff demand, and billing statements from BCMA’s attorneys

supporting the attorney fee portion of BCMA’s payoff demand.

E. The Judgment on the Pleadings

       SCI moved for judgment on the pleadings, claiming BCMA’s complaint did not

state a cause of action. (Code Civ. Proc., § 438, subd. (c)(1).) The court granted the



                                              9
motion without leave to amend and entered judgment cancelling the assessment lien,

stating that BCMA’s complaint failed to state a cause of action, that BCMA would take

nothing by its complaint, and that BCMA had no defense to SCI’s cross-complaint.

BCMA appeals.

                                      III. DISCUSSION

A. Standard of Review

       A motion for judgment on the pleadings may be made on the ground the complaint

fails to state a cause of action. (Code Civ. Proc., § 438, subd. (c)(1).) The motion is

equivalent to a general demurrer and is governed by the same de novo standard of review.

(People ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 777.)

In reviewing the motion, we deem true all properly pleaded material facts, but not

contentions, deductions, or conclusions of fact or law, and we may also consider

judicially noticed matters. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) Our task is to

determine, independently of the trial court, whether the challenged pleading states a cause

of action. (Bezirdjian v. O’Reilly (2010) 183 Cal.App.4th 316, 322.)

B. The Lien Priority Statutes, Overview

       California follows a first in time, first in right system or rule of lien priorities

which is “modified by the recording statutes.” (First Bank v. East West Bank (2011) 199

Cal.App.4th 1309, 1313; 4 Miller & Starr, Cal. Real Estate (2017 supp.) § 10:1, pp. 10-9

to 10-10 (4 Miller & Starr).) The rule is expressed in section 2897, which provides:

“Other things being equal, different liens upon the same property have priority according



                                               10
to the time of their creation . . . .” (Italics added.) The rule “assumes” that a party with a

subsequently-created lien had actual or constructive knowledge of “all pertinent facts”

concerning a previously-created lien. (4 Miller & Starr, supra, at § 10:1, p. 10-11.)

Thus, under the rule, a person receiving a deed of trust on real property acquires his or

her lien subject to all previously-created liens and encumbrances of which the person has

actual or constructive knowledge. (Ibid.; §§ 1213, 1217.)

       The recording statutes (§§ 1213-1220) “generally do not govern either the creation

or the relative priority of interests in real property.” (4 Miller & Starr, supra, at § 10:1, p.

10-11.) “Rather, they affect the priority of interests [in real property] by defining when a

person is deemed to have constructive notice of another interest in the property.” (Id. at

§ 10:1, p. 10-12, fn. omitted.) “A properly recorded conveyance of real property . . .

serves as constructive notice of its contents to all subsequent purchasers and

encumbrances. (§ 1213[]),” and, “a conveyance recorded first generally has priority over

any later-recorded conveyance. (§ 1214.)” (Thaler, supra, 80 Cal.App.4th at p. 1099.)

       A “‘conveyance’” includes “every instrument in writing by which any estate or

interest in real property is created, aliened, mortgaged, or [e]ncumbered, or by which the

title to any real property may be affected, except wills.” (§ 1215; Thaler, supra, 80

Cal.App.4th at p. 1099.) A conveyance is “perfected,” meaning it gives constructive

notice of its contents, upon its recordation. (Thaler, supra, at p. 1100.) The perfection of

a conveyance is not to be confused with its creation. (See 4 Miller & Starr, supra, at

§ 10:1, pp. 10-11 to 10-12.)



                                              11
       The GCC&R’s, SCI’s third deed of trust, and BCMA’s assessment lien are

conveyances for purposes of the recording statutes (§ 1215; Thaler, supra, 80

Cal.App.4th at p. 1099), and all were properly recorded. Thus, SCI had constructive

notice of the 1984-recorded GCC&R’s when SCI’s third deed of trust was recorded in

2013, and BCMA had constructive notice of SCI’s third deed of trust when BCMA’s

assessment lien was recorded in 2014. The GCC&R’s created a covenant running with

the golf course property, binding on its original owner and all subsequent owners and

encumbrancers. (§ 1468; Citizens for Covenant Compliance v. Anderson (1995) 12

Cal.4th 345, 349, 367.)

C. The Parties’ Lien Priority Dispute

       BCMA claims its 2014-recorded assessment lien has priority over SCI’s 2013-

recorded third deed of trust because the assessment lien was both created and perfected in

1984, when the GCC&R’s were executed and recorded. We disagree. Pursuant to the

GCC&R’s, the assessment lien was neither created nor perfected until it was recorded in

2014. Nonetheless, the assessment lien has priority over SCI’s third deed of trust,

pursuant to the priority and subordination provisions of the GCC&R’s.

       1. The GCC&R’s Did Not Create or Perfect BCMA’s Assessment Lien

       We first address whether BCMA’s assessment lien was created and thus perfected

by the 1984-recorded GCC&R’s. To answer to this question, we must interpret the

GCC&R’s. “‘The same rules that apply to interpretation of contracts apply to the

interpretation of CC&R’s.’ [Citation.]” (Fourth La Costa Condominium Owners Assn. v.



                                            12
Seith (2008) 159 Cal.App.4th 563, 575.) That is, “[t]he language of a contract is to

govern its interpretation, if the language is clear and explicit.” (§ 1638.) In addition, we

interpret the entire contract, taken together, “so as to give effect to every part, if

reasonably practicable, each clause helping to interpret the other.” (§ 1641.) “A contract

must receive such an interpretation as will make it lawful, operative, definite, reasonable,

and capable of being carried into effect, if it can be done without violating the intention

of the parties.” (§ 1643; see generally Zalkind v. Ceradyne, Inc. (2011) 194 Cal.App.4th

1010, 1027.) Contractual provisions are interpreted de novo where, as here, their

interpretation turns solely on the language of the provisions and does not involve the

credibility of any evidence extrinsic to the provisions. (Morgan v. City of Los Angeles

Bd. of Pension Comrs. (2000) 85 Cal.App.4th 836, 843.)

       In section 3(b), titled “Enforcement by Lien,” the GCC&R’s provide: “There is

hereby created a claim of lien, with power of sale, on the Golf Course Property to secure

payment to the Association [(BCMA)] of any and all Assessments levied against any and

all owners of the Golf Course Property pursuant to this Declaration . . . .” (Italics added.)

If any “delinquency in the payment of any such Assessment” is not paid within 10 days

of BCMA’s written demand, BCMA “may thereafter elect to file and record a claim of

lien” stating the amount claimed for the delinquency. “Each delinquency shall constitute

a separate basis for a demand or claim of lien or a lien, but any number of defaults may

be included within a single demand or claim of lien . . . .” Section 3(b) then provides that

“[u]pon such recordation of a duly executed original or copy of such a claim of lien, the



                                               13
lien claimed therein shall immediately attach and become effective in favor of the

Association [(BCMA)] as a lien upon and against the Golf Course Property.”

(GCC&R’s, § 3(b), italics & underlining added.) These provisions make it clear that an

inchoate “claim of lien” was created and perfected when the GCC&R’s were recorded in

1984, but no actual “lien” or assessment lien was or could be created or perfected against

the golf course property until the claim of lien was reduced to an assessment lien and was

recorded.

       BCMA argues its assessment lien was created by the GCC&R’s statement that

“[t]here is hereby created a claim of lien . . . .” (Italics added.) We disagree. This

argument disregards other GCC&R provisions which state the “claim of lien” does not

“attach” to the golf course property or become “effective in favor of” the Association or

BCMA “as a lien upon and against the Golf Course Property” (italics added), unless and

until four contingencies are satisfied: (1) the owners of the golf course property fail to

maintain the golf course property in accordance with the GCC&R’s; (2) BCMA incurs

costs to maintain the golf course property; (3) the owner of the golf course property fails

to pay those costs within 10 days of BCMA’s written demand; and (4) the claim of lien is

reduced to a writing, stating its amount, and is recorded. (GCC&R’s, § 3(b), italics

added.)

       The GCC&R’s as a whole show that its drafters intended to create an inchoate or

contingent “claim of lien” in favor of BCMA, upon the 1984 execution and recordation

of the GCC&R’s. But the GCC&R’s did not create a fully-fledged “lien” or “assessment



                                             14
lien” against the golf course property. Instead, they created a procedure for BCMA to

follow in order to transform its inchoate or contingent “claim of lien” into an assessment

lien, and make that assessment lien “effective in favor of” BCMA. The last contingency

required BCMA to record its claim of lien against the golf course property for a specified

amount, but this did not occur until 2014 when BCMA recorded its notice of delinquency

of assessment lien.

       Section 4, titled “Subordination to Certain Trust Deeds[,]” supports our

interpretation of the provisions of section 3. Section 4 provides that “[t]he lien for the

Assessment provided for herein shall not be subordinate to the lien of any deed of trust or

mortgage, except the lien of a first deed of trust or first mortgage . . . that is of record as

an encumbrance against the Golf Course Property . . . .” This provision does not state

that the “claim of lien” shall not be subordinate to other liens.

       Section 4 further provides that “[t]he sale or transfer of the Golf Course Property

shall not affect any Assessment lien created pursuant to the terms of this Declaration to

secure an Assessment due prior to, on, or after the date of such sale or transfer . . . .”

(Italics added.) It does not state the sale or transfer of the golf course property shall not

affect the “claim of lien.” In sum, the GCC&R’s as a whole show that BCMA’s

assessment lien was not created or perfected until BCMA’s notice of delinquency of the

assessment lien was recorded in 2014.




                                               15
       2. The Assessment Lien Does Not “Relate Back” to the GCC&R’s

       BCMA next claims its assessment lien “relates back” to the 1984 execution and

recordation of the GCC&R’s because the GCC&R’s effectively secured any future costs

BCMA incurred in maintaining the golf course property. In support of this relation back

claim, BCMA relies on section 2884, which provides: “A lien may be created by

contract, to take immediate effect, as security for the performance of obligations not then

in existence.” (Italics added.) We disagree that the GCC&R’s created a presently

effective lien securing BCMA’s subsequently incurred costs of maintaining the golf

course property.

       Although a lien may be contractually created to take immediate effect as security

for obligations not then existing (§ 2884), that is not what occurred in this case. As we

have explained, the assessment lien was not created by and did not take “immediate

effect,” upon the 1984 execution and recording of the GCC&R’s. Rather, the assessment

lien was created and became effective in favor of BCMA as a lien against the golf course

property in 2014, when BCMA recorded its notice of the delinquency of the assessment

lien and all of the other conditions for creating the assessment lien were satisfied.

       BCMA relies on Tapia v. Demartini (1888) 77 Cal. 383 and Oaks v. Weingartner

(1951) 105 Cal.App.2d 598 to support its claim that the 1984 execution and recording of

the GCC&R’s was sufficient to secure any future costs BCMA incurred in maintaining

the golf course property, including the assessment lien. Tapia and Oaks are

distinguishable because they involved mortgages for future advances which were created



                                             16
and perfected at the time the mortgages were recorded, not when the future advances

were made. In contrast, BCMA’s assessment lien was not created or perfected until after

BCMA had incurred costs in maintaining the golf course property, and the notice of

delinquency of the assessment lien was recorded in 2014.

       The parties in Tapia disputed whether a mortgage securing a promissory note for

$15,000 plus interest had priority over several subsequently-recorded mechanic’s liens.

(Tapia v. Demartini, supra, 77 Cal. at p. 384.) At the time the mortgage was executed,

the mortgagor owed less than $4,000 on the mortgage, but the mortgage was “executed

and delivered with the understanding and agreement” that it would secure payment of the

amounts owed when the mortgage was executed plus future advances of up to the

$15,000 amount secured, plus interest. (Id. at pp. 384-385.) In holding the mortgage had

priority over the subsequently-recorded mechanic’s liens up to the $15,000 amount, plus

interest, the Tapia court explained: “It is firmly settled by a long line of decisions that a

mortgage, made in good faith to cover future advancements or indorsements, is valid, not

only as between the immediate parties to the instrument, but as against subsequent

purchasers or encumbrancers, if properly recorded.” (Id. at p. 386, citing § 2884 &

cases.) The Tapia court also pointed out that it was unnecessary for the mortgage to have

stated the amount it secured. (Tapia v. Demartini, supra, at p. 387.) The mortgage

would have been “sufficiently definite to put subsequent encumbrancers on inquiry” of

the amount it secured, if the mortgage had stated that it secured an unspecified amount of

future advances. (Ibid.)



                                              17
       Oaks involved a recorded mortgage for an unspecified amount of future advances.

(Oaks v. Weingartner, supra, 105 Cal.App.2d at p. 599.) The mortgage stated that it

secured a $4,178 loan and that it would also secure “‘any further or additional loans (not

to exceed in the aggregate the sum of $ ____, to be evidenced by a note or notes therefor)

. . . .’” (Ibid.) A total of $11,000 in additional loans were made to the mortgagor. The

holders of subsequently-recorded liens claimed the mortgage was only sufficient to

secure the $4,178 loan, but the Oaks court disagreed. Following Tapia, the Oaks court

held that the mortgage secured the full amounts advanced, even though those amounts

were not stated in the mortgage. (Oaks v. Weingartner, supra, at pp. 599-602.) “By not

so filling in the blank the parties elected to place no limitation upon the general

covenant.” (Id. at p. 600.)

       The differences between the mortgages for future advances in Tapia and Oaks and

the GCC&R’s are readily apparent. The mortgages in Tapia and Oaks plainly stated that

they would secure future advances, and their terms were sufficiently definite to impart

constructive notice to subsequent encumbrancers of the real properties that they would

secure future advances against those real properties. In contrast, the GCC&R’s did not

state that they were creating a presently or immediately effective lien in favor of BCMA

to secure any future costs BCMA incurred in maintaining the golf course property.

(§ 2884.) Rather, the GCC&R’s provided only that BCMA would have an assessment

lien against the golf course property if and when an assessment lien for a specified

amount was recorded against the golf course property.



                                             18
       3. BCMA’s Assessment Lien is Nonetheless Prior to SCI’s Third Deed of Trust

       BCMA claims that even if the assessment lien was not created or perfected until it

was recorded in 2014, it still has priority over SCI’s third deed of trust pursuant to the

priority and subordination provisions of the GCC&R’s. BCMA argues these provisions

modified “default” “first in time, first in right” rule, and rendered SCI’s third deed of

trust subordinate to BCMA’s later-recorded assessment lien. We agree.

       The language of the GCC&R’s is clear and explicit. Section 3 provides that an

assessment lien “shall have priority over all liens or claims created subsequent to the

recordation of this Declaration [of the GCC&R’s], except for tax liens for real property

taxes and assessments in favor of any municipal or other governmental assessing unit and

except for certain trust deeds as provided in Section 4 below.” Section 4, titled

Subordination to Certain Trust Deeds, provides: “The lien for the Assessment provided

for herein shall not be subordinate to the lien of any deed of trust or mortgage, except the

lien of a first deed of trust or first mortgage . . . .” The BCC&R’s echo these provisions.

They provide that any assessments against the golf course property for the payment of

maintenance expenses, “shall, pursuant to the [GCC&R’s], become a lien against the

Golf Course Property and shall have the priority and enforcement rights set forth in the

[GCC&R’s].” (Italics added.)

       These provisions modified the otherwise-applicable “first in time, first in priority”

rule of lien priorities. (§ 2897.) They constructively notified SCI that any recorded

assessment lien against the golf course property would have priority over SCI’s third



                                             19
deed of trust—even if the assessment lien was recorded after the third deed of trust was

recorded. “Subordination is, strictly speaking, a status, not an agreement . . . . It refers to

the establishment of priority between different existing encumbrances on the same parcel

of property, by some means other than the basic priority involved in the concept of ‘first

in time, first in priority’ . . . .” (Middlebrook-Anderson Co. v. Southwest Sav. & Loan

Assn. (1971) 18 Cal.App.3d 1023, 1029-1030, italics added.)

       4. Conclusion

       The GCC&R’s created a covenant running with the golf course property in favor

of BCMA, and derivatively, in favor of the Bear Creek Development homeowners, to

ensure that the golf course property was maintained in “a clean and attractive condition.”

(§ 1468; Citizens for Covenant Compliance v. Anderson, supra, 12 Cal.4th at pp. 349,

367.) To this end, the GCC&R’s allow BCMA to maintain the golf course property if its

owner fails to do so, and to create and record an assessment lien to secure certain costs

incurred in maintaining the golf course property. The GCC&R’s further provide that any

assessment lien will have priority over all other liens, including deeds of trust, except a

first deed of trust, recorded at any time after the GCC&R’s were recorded. By these

provisions, the GCC&R’s ensure that the Bear Creek Development homeowners will not

have to live near a poorly maintained golf course property with no means of remedying

the situation or of adequately securing certain costs incurred by BCMA in maintaining

the golf course property. SCI had constructive notice of the GCC&R’s when it recorded

its third deed of trust against the golf course property in 2013, and SCI is bound by the



                                              20
GCC&R’s. Thus, BCMA’s assessment lien is prior to SCI’s previously-recorded third

deed of trust.

                                   IV. DISPOSITION

       The judgment on the pleadings in favor of SCI is reversed. The parties shall bear

their respective costs on appeal. (Cal. Rules of Court, rule 8.278.)

       NOT TO BE PUBLISHED IN OFFICIAL REPORTS


                                                               FIELDS
                                                                                           J.


We concur:

MILLER
                 Acting P. J.

CODRINGTON
                           J.




                                            21
Filed 10/31/18

                   COURT OF APPEAL – STATE OF CALIFORNIA
                             FOURTH DISTRICT
                               DIVISION TWO

                                        ORDER


BEAR CREEK MASTER
ASSOCIATION,
                                                     E066588
      Plaintiff, Cross-defendant and
Appellant,                                           (Super.Ct.No. MCC1500389)

v.                                                   The County of Riverside

SOUTHERN CALIFORNIA
INVESTORS, INC.,

      Defendant, Cross-complainant and
Respondent.


THE COURT

        A request having been made to this Court pursuant to California Rules of Court,
rule 8.1120(a), for publication of a nonpublished opinion heretofore filed in the above
entitled matter on October 19, 2018, and it appearing that the opinion meets the standard
for publication as specified in California Rules of Court, rule 8.1105(c),

       IT IS ORDERED that said opinion be certified for publication pursuant to
California Rules of Court, rule 8.1105(b).

                                                               FIELDS
                                                                                        J.
We concur:

MILLER
                 Acting P. J.

CODRINGTON
                           J.


                                            1
