11 Jun How Does Foreclosure Law Work in Tennessee?
In my Atlanta bankruptcy practice, I sometimes get calls from Tennessee residents who live in Chattanooga or smaller towns like Copperhill. Many of these Tennesseeans work in Georgia but live in Tennessee. I refer these folks to counsel in Tennessee but I recently decided to do a little research to see if Tennessee foreclosure laws were different than those in Georgia. The Bankruptcy Law Network family of blogs (which includes this Mortgage Law Network blog) does not yet have a Tennessee representative, so if you are a Tennessee resident, here is what I found.
Like Georgia, Tennessee allows for non-judicial foreclosures. Almost every residential mortgage loan written in Tennessee is in the form of a “deed of trust” in which the lender assigns a trustee to hold legal title to the homeowner’s property. These deeds of trust also typically include a “power of sale” provision which allows the trustee to advertise and sell the property without the need to go to court, in the event that the debtor defaults. Finally, most of these deeds of trust also include a waiver of Tennessee’s right of redemption, meaning that the foreclosed homeowner has bargained away his right to recover his property (by paying the entire outstanding balance) within two years after the foreclosure.
As an aside, it is not surprising that lenders would include this waiver of the right of redemption – otherwise, investors would be hesitant to buy foreclosed properties, leading to more deficiency claim actions against debtors.
The notice provision under Tennessee law is actually less demanding that what I see in Georgia. In Tennessee, the foreclosing lender need only advertise the foreclosure sale three times in a newspaper regularly published in the county where the property is located, with the first publication no less than 20 days prior to the sale. By contrast the Georgia notice statute requires four published notices in the month prior to the planned foreclosure.
If you are a Tennessee resident facing foreclosure, be aware that you do not have a lot of time to research and decide whether Chapter 13 is an appropriate remedy for you.
Sources: Tennessee foreclosure law summary published by McCurdy and Candler, a creditor rights firm and Tennessee mortgage foreclosure information page published by a Knoxville bankruptcy attorney debtor law firm.
Jonathan Ginsberg, Esq.
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