Foreclosure Process in Tennessee

by : Kathy Swift


Tennessee follows both judicial or in court and non-judicial or out of court foreclosures.? In court foreclosures begin by the bank filing a complaint against the homeowner in an attempt to get a decree of sale from the judge.? Once obtained, the judge gives the homeowner a time frame in which they can save their house from sale.? To do this, the home owner must pay all missed payments and late fees and attorney's fees.

As in all states where both in court and out of court processes are followed, the determining factor as to which type of foreclosure the bank will use is determined by the language in the mortgage or deed of trust.? If the document in question contains a power of sale clause (most do), then the bank can use the out of court process.? They will invariably choose to do it in this way, because it saves them time and money.? In the absence of a power of sale clause, the bank must use the court system to sell the home that is attached to the loan that is in default.

Out of court proceedings in Tennessee begin with the sale being advertised in a local paper, on three separate occasions, the first of these ads must be run a minimum of twenty days in front of the scheduled sale date.

If there is no newspaper published in the county where the home is located, then the bank must post a public notice of the sale in five places in the county where the property is located.? These notices must be placed on the door of the courthouse for the county in which the home is located. And, one or the other of these five public postings can actually be placed anywhere the bank's lawyer sees fit to put them.

This trustee sale or auction, is required to be held anywhere from 10:00 am until 4:00 pm.

The home will be auctioned to the highest bidding person at the sale.? The winning bidder must be prepared to pay that bid in cash.

In Tennessee, the sheriff has the right to set a minimum or beginning bid price for the auction.? This minimum acceptable price must be at least fifty percent of fair market value.? Of course that minimum or beginning bid price can be set at more than fifty percent, it just can't be less than that amount.

A certificate of sale is awarded to the highest bidder at the auction. However this winning bidder will not receive the deed until after the redemption period has expired. The redemption period is an amount of time during which the former owner of the home is permitted to come up with the amount of the highest bid plus costs and fees.? If they can mange to do this they can again re-gain ownership of the property.? In Tennessee this redemption period is two years long.

Sometimes this right of redemption has already been waived in the language of the deed of trust.? Deficiency judgments are allowed in Tennessee.

This means that if the bank chooses to, it can continue to pursue the former owner of the home for any money that was less the amount of the loan that was not generated by the sale of the home.

But, most banks realize that his is a futile waste of time and money on their part.? If the former home owner could not make their payments, in almost all cases they will have nothing of value that the bank could get their hands on.? This makes it a very strong likelihood, that the banks will leave the former home owner alone after the auction is complete.