- 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
process.
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.
Non-Judicial Foreclosure
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.
More information on Tennessee foreclosure laws.
