HOA’s unrecorded judgment against condo owner is second and junior to later refinancing

A homeowners’ association (HOA) recorded an assessment lien against title to a condo unit, then sued the owner and obtained a judgment for the amounts due and foreclosure of the unit to satisfy the money award. An abstract of the judgment was not recorded. Later, the condo owner recorded a trust deed in favor of a lender. The HOA sought to have their unrecorded judgment established as having priority over the lender’s trust deed so the HOA could foreclose as a first lien on the property. The HOA claimed its judgment for foreclosure of the assessment lien had priority over the lender’s trust deed since the HOA’s judgment occurred first. The lender claimed the HOA’s judgment against the condo owner was subordinate to the lender’s trust deed since the assessment lien had expired and an abstract of the judgment had not been recorded, giving the lender’s recorded trust deed priority. A California court of appeals held a trust deed lien recorded against a condo owner’s unit has priority over an HOA’s unrecorded judgment for foreclosure of a recorded assessment lien since the assessment lien is extinguished by the judgment and a properly recorded trust deed lien has priority over a judgment for which an abstract was not first recorded. [Diamond Heights Village Association, Inc. v. Financial Freedom Senior Funding Corp. (2011) 196 CA4th 290]