Tennessee Foreclosure Process
Foreclosure is the legal process that terminates the rights of a borrower after the borrower defaults on a mortgage issued against the property. Tennessee is a title theory state, meaning that property titles remain in a trust until the loan is paid in full. The lender, or the lender's trustee, holds the property title. A deed of trust is the legal document that ties the title to the property. In Tennessee, the mortgage loan document doubles as a deed of trust. The deed of trust transfers property ownership to the lender as part of the loan transaction.
Other People Are Reading
-
Types
-
The state of Tennessee has both judicial and nonjudicial foreclosures. A judicial foreclosure is legal process in which the lender files a complaint against the borrower and receives a decree of sale from the court in the county where the property is located. The court may offer the borrower a specific time frame to pay the delinquent amount, plus legal fees and court costs.
In a non-judicial foreclosure, no court action is required due to the fact that the mortgage or deed of trust contains a power of sale clause. When the borrower defaults on the mortgage, the lender or their trustee initiates the foreclosure process to satisfy the debt.
Notice
-
The state of Tennessee follows the specific sale dates, notices and locations specified in a judicial foreclosure. In a nonjudicial foreclosure, a notice of sale must be listed in a newspaper published within the county of sale at least three different times. The first notification must appear in the newspaper at least 20 days before the sale date. If a county newspaper does not exist, then the notice must be posted at least 30 days prior to the sale in no less than five public places within the county. One notice must be in the neighborhood where the property to be foreclosed resides and another must be at the courthouse door. If the borrower currently possesses the property, a notice of sale must be served at least 20 days before the sale of the property.
-
Foreclosure Sale
-
Foreclosure sales must be held between 10 a.m. and 4 p.m. at the location specified in the notice or at a location specified in a power of sale clause in a deed of trust or mortgage. Foreclosed properties are sold for cash to the highest bidder. In Tennessee, the sheriff of each county has the authority to set a minimum acceptable price for the foreclosure property. The minimum price must be at least 50 percent of the fair market value of the property.
Timing
-
An uncontested nonjudicial foreclosure process may take between 90 and 120 days in Tennessee. A judicial foreclosure may take longer due to the action process in court. The borrower can delay either type of foreclosure process by filing bankruptcy or by other court actions.
Deficiency Judgments and Redemption
-
In Tennessee, the court may issue a deficiency judgment against the borrower for the balance of the mortgage debt after the property was sold at a foreclosure sale. The borrower has up to two years to redeem the property unless the original deed of trust waived his right of redemption.
-
