Tennessee Foreclosure Law
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust, Mortgage
- Timeline: Usually 60 days
- Right of Redemption1: Yes
- Deficiency Judgments2 Allowed: Yes
Lenders in the state of Tennessee may foreclose on deeds of trusts and mortgages in default using either a judicial or non-judicial process.
Judicial Foreclosure
A judicial process of foreclosure requires that the lender file a lawsuit and attain a court order to foreclose on a particular property.
Non-Judicial Foreclosure
If a power of sale clause exists in the deed of trust or mortgage document, a non-judicial process of foreclosure is used. This allows the lender to sell the property and pay off the balance of the loan in the event the homeowner defaults. The power to sell may be completed by the lender or their representative in situations where a power of sale exists. The procedure for this type of foreclosure process is explained in the "Power of Sale Foreclosure Procedure" listed below.
Power of Sale Foreclosure Procedure
If the deed of trust or mortgage has a power of sale clause and it details the time, place and terms of sale, then the outlined procedure must be followed. However, if the power of sale clause does not clarify the time, place and terms of sale, then a foreclosure sale is conducted as follows:
- At least twenty (20) days prior to the date of sale, the borrower must receive a notice of the sale. The notice of sale is also published three (3) separate times in a newspaper. The first printing must appear at least twenty (20) days before the sale is to occur.
- The sale is held by public auction for cash to the highest bidder.
- The sheriff sets what is considered the minimum acceptable price for the property. That price has to be equal to or greater than fifty (50) percent of the fair market value.
- The winning bidder receives a certificate of sale and will receive the deed after the borrower’s right to redemption has expired.
If the right of redemption has not been waived in the original deed of trust, the borrower has two (2) years in which to redeem the property. The lender has to the right to pursue a deficiency judgment as well.
1 A borrower’s right to reacquire property lost due to a foreclosure.
2 A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.
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