I think I recall reading about a case which held that a deed in lieu of foreclosure could in fact wipe out junior liens if there was certain language in the deed that clearly set forth that it is a deed in lieu of foreclosure and is in satisfaction of a debt secured by a deed of trust. I don't know if I read this in your publication or another publication, or if I am merely imagining this. Can you help me?

Thanks for your question. I don't think it is possible for a deed in lieu to cut off junior liens. Only a foreclosure can do that. In fact, when I take a deed in lieu, I always expressly provide that there is no merger and the deed of trust remains in effect. That way the lender can foreclose later if it turns out that there are subordinate matters.