The Tennessee Supreme Court hasn’t yet issued a ruling in the Terry Case v. Wilmington Trust case, which was argued before it nearly a year ago. It’s an important case for foreclosure attorneys, since the case will decide what impact an (allegedly) defective foreclosure sale has on title: Does the sale convey valid title or not?
That’s the “big picture” issue, but the case also touches on an important mechanical issue: Whether an attorney can rely on the clear text of Tenn. Code Ann. § 35-5-101(f) when continuing foreclosure sales for less than 30 days.
In Case, the “boilerplate” text of the deed of trust required all notices by either party to be in writing. But, in the foreclosure statutes, Tenn. Code Ann. § 35-5-101(f)(3) expressly a creditor to continue a foreclosure upon an oral announcement, if the continuance is for less than 30 days. Because the attorneys for Wilmington only made an oral announcement of the continuance and didn’t mail a notice, the borrower argued, they failed to comply with the “written notice” terms of the Deed of Trust. The Tennessee Court of Appeals agreed with the borrower, and it deemed the sale possibly invalid.
It’s an important question because nearly every Tennessee Deed of Trust will impose a duty on the parties to provide notices in writing. It’s a standard provision, designed to make sure that oral statements don’t amend, waive, or release the rights held by either party under the loan.
In fact, I’m preparing a foreclosure today, and the final provisions of deed of trust I’m foreclosing on has a “Notices” paragraph that says: “Any notice required to be given under this Deed of Trust, including without limitation any notice of default and any notice of sale shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail. as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Deed of Trust.”
With the Tennessee Supreme Court’s decision looming, Tennessee foreclosure lawyers don’t have the clarity on how to reconcile these different directives.
But, having said that, until the Supreme Court decides, a smart foreclosure attorney will-as I’ve recommended in the past–always comply with the most onerous of all of the requirements, no matter if they are in the deed of trust, a loan agreement, or the foreclosure statutes.
One of the scary things about a non-judicial foreclosure in Tennessee is that it’s all “paperwork,” and there’s no judge involved…until a party challenges the process. You don’t know you’ve messed something up until long after the fact. Foreclosures are careful, deliberate work, and not for the faint of heart. When in doubt over the requirements, I follow them all.
Creditors Rights 101 