Tennessee Foreclosure Laws
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- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust, Mortgage
- Timeline: Typically 60 days
- Right of Redemption: Yes
- Deficiency Judgments Allowed: Yes
In Tennessee, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure
The judicial foreclosure process is one in which the lender must file a complaint against the borrower and obtain a decree of sale from a court having jurisdiction in the county where the property is located before foreclosure proceedings can begin. Generally, if the court finds the borrower in default, they will give them a set period of time to pay the delinquent amount, plus costs. If the borrower does not pay within the set period of time, the court will then order the property to be sold.
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:
- A notice of sale must be published at least three (3) different times in a newspaper published in the county where the sale is to be made, with the first publication appearing at least twenty (20) days prior to the sale.
- Unless otherwise ordered, if no newspaper is published in said county, the notice of sale must be posted at least thirty (30) days in advance of the sale in at least five (5) public places within the county. At least one of these notices must be placed at the courthouse door and another in the neighborhood of the property itself.
- A notice of sale must also be served upon the borrower at least twenty (20) days prior to the date of sale if the borrower is in possession of the property.
- The sale must be held between the hours of 10:00 am and 4:00 pm for cash to the highest bidder. The sheriff of each county in the state of Tennessee may set a minimum acceptable price for the property as long as the price is equal to or greater than fifty percent (50%) of the fair market value.
- The successful bidder at the foreclosure sale will receive a certificate of sale and may be entitled to receive a deed once the borrowers right of redemption has expired.
Deficiency judgments are allowed in Tennessee and the borrower has a period of two (2) years to redeem the property, unless their right of redemption was waived in the original deed of trust.
|Judicial||Non-Judicial||Process Period||Sale Publication||Redemption Period||Sale/NTS|
|No||Yes||40-45 Days||20-25 Days||730 Days||Trustee|
|Non-judicial foreclosures only|
In Tennessee, court foreclosures are very rare. Out-of-court proceedings are customary and occur when a clause exists in a mortgage or deed of trust that authorizes the lender to sell the property if the borrower defaults. Once the borrower defaults on the payment, the trustee assigned in the deed of trust has the authority to begin the foreclosure process and advertise the property for sale.
The borrower may stop the foreclosure process prior to the sale by paying the total amount owed plus any applicable fees.
The typical foreclosure timeline is approximately two months.
Notice of Sale / Auction
If the deed of trust or mortgage contains a clause that specifies the time, place, and terms of sale, then the specified procedure must be followed.
The notice of foreclosure sale includes the names of the affected parties, a description of the property, and the date, time, and location of the sale. It also includes all liens on the property. The notice is published three times in a newspaper, with the first publication appearing at least 20 days prior to the foreclosure sale.
State statute does not require any further notification; however, it’s not uncommon for the trustee to mail a notification of the sale to the borrower.
The sale is held by a trustee between 10:00am and 4:00pm. After the sale, the trustee transfers the ownership to the highest bidder.
Deeds of trust in Tennessee commonly do not allow the borrower to redeem the property after the sale. If this right is not waived, the borrower may redeem the property by paying the total debt plus costs within two years.
STATE OF TENNESSEE GOVERNMENT RESOURCES:
Executive Director, Linda O’Neal
Commissioner, Katherine O’Day
Commissioner, Julie Mix McPeak
Commissioner, Bill Hagerty
Commissioner, Mark Ernkes
Commissioner, Greg Gonzales
Commissioner, Rebecca Hunter
Commissioner, Dr. Raquel Hatter
Commissioner, Karla Davis
Commissioner, Richard H. Roberts
Treasurer, Richard H. Lillard, Jr.
Governor, Bill Haslam
Robert E. Cooper. Jr.
STATE OF TENNESSEE FORECLOSURE RESOURCES:
REPORT FRAUD OR SCAMS IN TENNESSEE:
STATE OF TENNESSEE ADDITIONAL RESOURCES:
Vote! – Vote411.org
STATE OF TENNESSEE SHORT SALE RESOURCES:
STATE OF TENNESSEE COURTS & LAW LIBRARY:
Elizabeth “Libby” Sykes, Administrative Director
FEDERAL GOVERNMENT RESOURCES:
Fannie Mae Loan Look-Up Tool – Find out if your loan is owned by Fannie Mae here.
Homeowner Crisis Resource Center – Includes tips on avoiding foreclosure.
MyMoney.gov – This site organizes financial education help from over 20 different Federal web sites in one place, including dealing with mortgages.
Service Members Civil Relief Act – The Act that postpones or suspends certain civil obligations to enable service members to devote their full attention to duty and to relieve stress on their families. The act covers:
• Outstanding credit card debt
• Mortgage payments
• Pending trials
• Termination of lease
• Eviction from housing
• Life insurance protection