Mechanic’s Lien Eliminated After Deed In Lieu Of Foreclosure.

Property was subject to a first deed of trust and a mechanic’s lien. The property owner defaulted on the loan secured by the trust deed.  Faced with foreclosure on that senior debt, the property owner gave the trust deed beneficiary title to the property by means of a grant deed in lieu of foreclosure. The trust deed beneficiary, by then the grantee, foreclosed on the property. The holder of the mechanic’s lien filed suit to foreclose its lien. The superior court ordered foreclosure on the mechanic’s lien. The appellate court reversed, stating: “Under well-established California law, the senior beneficiary’s lien and title ordinarily do not merge when a deed in lieu of foreclosure is given if there are junior lienholders of record. The foreclosure after acceptance of the deed was therefore valid and eliminated all junior liens, including plaintiff’s mechanic’s lien.” (Decon Group, Inc. v. Prudential Mortgage Capital Company, LLC (Cal. App. Second Dist., Div. 1; June 30, 2014) 227 Cal.App.4th 665, [174 Cal.Rptr.3d 205].)