Tennessee Court of Appeals Makes Clear: Foreclosing Party Must Prove It “Sent” Foreclosure Sale Notice, Not that it was Actually “Received”

I’ve said that the Tennessee foreclosure process can be intimidating because it’s, largely, non-judicial. Because there’s no judge involved, it comes down to the foreclosure lawyer strictly following the intricate labyrinth of statutory requirements.

One of the fundamental steps, of course, is to “send” the homeowner a copy of the Notice of Foreclosure Sale. Under Tenn. Code. Ann. § 35-5-101(e), that sale notice “shall be sent on or before the first date of publication provided in subsection (b) by registered or certified mail, return receipt requested.”

When I’m conducting a foreclosure, it’s a great relief to get that signed, certified mail green card back, because I know that my borrower received the Sale Notice and knows about the sale.

But, what about the situations in which the green card doesn’t come back signed?

This has always been an issue, because a borrower in default on his loans likely sees a certified mail green card as bad news and doesn’t rush to the post office to sign for it, especially when a copy is also sent by first class mail.

It became an even bigger issue during the COVID pandemic, when mail delivery was disrupted and people weren’t leaving their house to go to the post office. One of my 2021 foreclosures was challenged because, instead of getting a signature (presumably to avoid human contact), the postman marked it delivered and wrote his badge number on the signature line.

Do I have to prove that the owner received the Notice of Sale?

A new opinion from the Tennessee Court of Appeals reminds us that proof of “delivery” is not necessary.

The case is Jennifer Scharsch v. Cornerstone Financial Credit Union, No. M2020-01621-COA-R3-CV (Tenn. Ct. App. Feb. 28, 2023). There, the borrower disputed “receipt” of the foreclosure sale notice. The Court made short work of this argument.

The Court wrote that Tenn. Code Ann. § 35-5-101(e) “only provides that the trustee shall ‘send’ the notice.” Id. (citing Smith v. Hughes, 639 S.W.3d 627, 640 (Tenn. Ct. App. 2021). Further, “[t]here is no statutory requirement that the notice be received by the debtor.” Davis v. Wells Fargo Home Mortg., No. W2016-02278-COA-R3-CV, 2018 WL 1560077, at *11 (Tenn. Ct. App. Mar. 29, 2018).

Because the foreclosing lender had submitted affidavit proof that it sent the notice, the lender satisfied its obligation under § 35-5-101(e).

“Even if [the borrower] never received the letter, [the foreclosing parties] satisfied the requirements of the deed of trust and Tennessee Code Annotated § 35-5-101. So whether [the borrower] received the notice of the foreclosure sale was not material for purposes of summary judgment.” Id.

On my sales, to be clear, I always want there to be a “receipt.” I want the call that has a payment proposal, or threatens a bankruptcy, or anything that shows that they received what I sent. But, due to the total unpredictability of the green-card signature system (and a borrower’s ability to dodge a signature), I don’t want the responsibility of proving that in order to have a valid sale.