Tennessee Foreclosure Law
Tennessee is a non-judicial foreclosure state.
The security instrument most commonly used is
a deed of trust which usually contains a power
of sale provision and names a trustee who holds
legal title to the property and is authorized
by the security instrument to commence default
proceedings. Foreclosure proceedings can not be
initiated without receipt of a recorded deed of
trust and a payoff statement (including per diem).
Other documents that are preferred and would be
very helpful are copies of the note, unrecorded
deed of trust (if that is all you have), any assignments
of the deed of trust and a title policy.
Upon default, the trustee is empowered to advertise
the property for sale. Although a deed of trust
may contain additional requirements, the Trustee
must generally cause an ad to be run in three
consecutive publications in a newspaper regularly
published in the county where the sale is to take
place. The first publication must be at least
20 days before the sale date. The notice must
contain the names of the “parties interested”
(including record holders of any mortgage, deed
of trust or other lien recorded more than 10 days
before the first ad is run), a description of
the land (including street address, if available)
and the time and place of the sale (all sales
are required to be held between 10:00 a.m. and
4:00 p.m.). The notice must also specifically
identify any lien claimed by either the United
States or the State of Tennessee and affirmatively
state that notice has been given to these entities
(including attaching, as an exhibit, a copy of
such notices). Additional notice requirements
may also be contained in the deed of trust such
as whether notice must be made by regular or certified
mail to borrowers and junior lienholders.
If properly conducted the foreclosure sale will
divest the borrower of all rights in the property
and eliminate all junior liens other than property
tax liens with the United States and the State
of Tennessee having 120 day redemption periods
following the sale. In Tennessee, borrower may
reinstate their loan right up to the point of
sale by paying all sums due including the costs
of collection. In addition, borrowers are given
a two year period under which they may redeem
the property through payment of the total indebtedness,
plus fees and costs. However, such redemption
rights are generally waived under most security
instruments in use in Tennessee. After the sale,
title is transferred to the highest bidder at
the foreclosure sale. The average time to complete
a sale is 60 to 90 days.
In the event that the bid at the foreclosure
sale is less than the total indebtedness (including
the fees and expenses of sale), a suit for a deficiency
judgment may be brought against the original makers
of the note and any subsequent parties who might
have assumed the debt. The statute of limitations
to pursue a foreclosure action is generally 10
years from the maturity of the debt.
The purchaser at the foreclosure sale must generally
file a separate forcible entry and detainer action
to remove occupants from the premises. Service
of process (by various methods) must be completed
upon all individuals claiming possession of the
property. Once service is accomplished a trial
date can be scheduled within six days and a judgment
of possession can be entered. The defendant has
10 days to appeal this judgment.
|
