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Judicial & Non-judicial Foreclosure in Tennessee

Which law provision governs foreclosure in Tennessee?

The laws which govern Tennessee foreclosures are found in Tennessee Code, Chapter 21(Proceedings in Chancery), Part 8, §21-1-803 (Foreclosure Sale)

What happens during Judicial Foreclosure in Tennessee?

In this, the lender needs to file complaint against the borrower and obtain decree of sale from the county court where property is located. If court finds the borrower default, it gives certain amount of time to the borrower to make the payment. If the borrower fails to pay then the property is auctioned to the highest bidder.

What happens during Non-Judicial Foreclosure in Tennessee?

Non-judicial foreclosure is conducted only when power of sale clause exists in deed of trust/mortgage. This clause allows borrower pre-authorizes the sale of property to pay off the balance loan in the incidence of their default. In such cases power is given to lender to sell the property by himself or his representative who generally referred as trustee. Guidelines for such procedure are mentioned under “Guidelines for power of sale foreclosure”.

Guidelines for power of sale foreclosure

If the deed of trust/mortgage contains a power of sale clause with specified time, place and terms of sale, then it should be followed.

Otherwise foreclosure is carries out as follows:

A notice of sale should be published in local newspaper of the county, for 3 times and the first ad should appear at least 20 days before the sale. If there is no local newspaper in the county, then notice should be posted at 5 public places in county which includes posting at the courthouse door and neighborhood of the property. The same notice should be served to the borrower 20 days before the sale, if he is staying in that property. The sale is conducted by the sheriff, between 10 a.m. to 4 p.m. Minimum acceptable value of the property should be at least 50% of their fair market value. Bids lower than that price should be not accepted.

This is legal information; it should not be treated as legal advice.