Want to keep a foreclosure attorney up at night? Call one late on a Friday and leave a voicemail that says “Hi. I’m with a title company doing a sale of a property you foreclosed on, and we found some liens and have some questions about your notice.”
Foreclosures in Tennessee are non-judicial, meaning it’s all technical compliance with the foreclosure statutes (and the terms of the deed of trust), but no judges are involved.
“It’s all paperwork,” I often say, “but you’d better get it exactly right.”
I got one of those calls last week. I conducted a sale on a Friday in April, and the deed was recorded at 2pm on the following Monday. But, the title company discovered, a new lien was recorded on 10am on that same Monday.
“We want to know whether you gave notice to this lienholder of your sale.”
“Well, no,” I confidently wrote, “I did not give written notice to the party who at no point prior to the foreclosure had recorded a lien.” But the terrified voice in my head was nevertheless freaking out a bit.
This is why Tenn. Code Ann. § 35-5-104(d) exists.
That statute defines the “parties interested” (and, thus entitled to be listed in the sale notice and receive notice) as parties holding liens, but those liens must have been “recorded more than ten (10) days prior to the first advertisement or notice in the register’s office of the county in which the real property is located.”
This makes sense, right? There has to be cutoff, at some point, of the foreclosing party’s obligation to check for new liens. If a party records a lien the day before the sale, this should not blow up the sale.
Having said that, the “best practice” is to downdate the status of title beyond the requirements of Tenn. Code Ann. § 35-5-104(d), especially if the goal is to conduct a clean, problem-free sale. I tend to check for these liens in the days before, and often the day of, my sale.
Here the lien that was recorded a few days after my sale falls outside of the “parties interested” definition.
Ok. Back to sleep where I worry about all the other cases that are rightfully keeping me up at night.
Creditors Rights 101 