Foreclosure – Creditors Rights 101

Seller Beware: There’s one small change in the new Tennessee foreclosure laws that you need to know

The practice of law is “form” driven. That means that, once a lawyer drafts a really good document, she tends to go back to that document the next time that same issue comes up.

This is particularly true with foreclosures in Tennessee.

Tennessee statutes strictly define what must be included in a foreclosure advertisement at Tenn. Code Ann. § 35-5-104. As a result, a smart foreclosure attorney might start with an old form foreclosure notice, but then compare that against the statute’s checklist, and use that revised document as a form for all of his future foreclosures. (A dumb attorney would just run with whatever is in the form–or what AI says–and not doublecheck it against the law.)

With a little bit of detail work on the front end, a savvy lawyer has a form document that will guide him for years…until the law changes.

This week, I and the Tennessee Bankers Association taught a class for the Knoxville Bar Association called “Modernization of Tennessee’s Foreclosure Laws“, which tracked the foreclosure law changes that went into effect on July 1, 2025.

The TL;DR version is that the newspaper publications have been reduced from 3 times to 2 times and, now, foreclosing parties must post the notice with a “third-party internet posting company.” See Tenn. Code Ann. § 35-5-101.

If you are updating your form, however, you need to dig in on that other statute. There’s a discrete change in the sale notice requirements.

It’s at Tenn. Code Ann. § 35-5-104(a)(7), which adds that the sale notice “shall…[i]dentify the website of the third-party internet posting company that posts an advertisement pursuant to § 35-5-101(a)(2).”

I’m posting this warning because, candidly, I didn’t catch this change in my first reading of the new statutes. Instead, when I was preparing my first “post-July 1” sale notice, I went online and read other recent advertisements, to see what changes other law firms had made on their forms.

In doing that, I noticed this text in many of them: As of July 1, 2025, notices pursuant to Tennessee Code Annotated § 35-5-101 et seq. are posted online at https://foreclosuretennessee.com by a third-party internet posting company.

That’s weird, I thought. Why are they saying that? That’s when I dug in on § 35-4-104 and found that little change.

Non-judicial foreclosures in Tennessee are tricky. You have to comply with both the letter of the statute exactly and with the terms of the relevant lien instrument. In short, you have to be awesome at paperwork.

Big-picture compliance with the changes in Tenn. Code Ann. § 35-5-101 is easy. This post is a reminder that there’s a very little change in Tenn. Code Ann. § 35-104 that could have a big impact on your sale.

New Tennessee Foreclosure Statute Doesn’t Change Lender’s Obligations under Deed of Trust

The changes to Tennessee’s foreclosure laws went into effect on July 1, 2025, and, as you can imagine, Tennessee banks and foreclosure lawyers have had lots of questions on how to navigate them.

This post isn’t going to answer all of them (for that, tune in to my upcoming presentation to the Knoxville Bar Association).

Today, let’s discuss one specific issue that keeps coming up: Now that new Tenn. Code Ann. § 35-5-101(a)(1) only requires publication “two (2) times in a newspaper,” does that preempt what my deed of trust says?

Many deeds of trust don’t have specific requirements; they just make a passing reference to “applicable law.” With those, you follow the statute and (now) do two publications.

Be careful, though: Lots of deeds of trust contain more specific requirements.

A few weeks ago (and after July 1), I prepared to foreclose under a $57,000,000 deed of trust. Naturally, I read every word of that deed of trust. (Many, many, many times.)

That deed of trust required the trustee to “advertise the time, place, and terms of sale at least three (3) different times in some newspaper published in the county where the Land is located…”

Remember, Tennessee is a “two track” foreclosure state, meaning that a foreclosing lender must satisfy the requirements of both the Tennessee foreclosure statutes and the requirements agreed to by the parties in the Deed of Trust.

So, in short: Yay, they have reduced the number of times a foreclosing lender must publish the foreclosure sale notice in the newspaper! Also, be sure to check your deed of trust to make sure you haven’t agreed otherwise.

Get Your Foreclosures Started Now: New Tenn. Code Ann. § 35-5-101 takes effect in Two Weeks

The Tennessee Legislature has made some significant changes to the foreclosure process in Tennessee, and those changes to Tenn. Code Ann. § 35-5-101 take effect on July 1, 2025.

This post is not to summarize the changes. (I’ll do that at this Tennessee Bar Association CLE, Upcoming Changes to Tennessee Foreclosure Law, alongside the Tennessee Bankers Association.)

The point of this post is more urgent.

By my analysis, the new statute doesn’t apply to foreclosures initiated before July 1 and, for those of you who aren’t ready or willing to learn a new law, I tell you this: Issue your foreclosure sale notices now.

Here’s my analysis. Tenn. Code Ann. § 1-3-101 says “[t]he repeal of a statute does not affect any right which accrued, any duty imposed, any penalty incurred, nor any proceeding commenced, under or by virtue of the statute repealed.”

The Tennessee Supreme Court has considered a similar question and wrote “[t]hough ‘procedural’ changes in the law generally apply retrospectively to causes of action arising before such changes become law,… where the pending action has gone beyond the procedural stage to which the amendment pertains, an amendment will not apply.” See Smallwood v. Mann, 205 S.W.3d 358, 365 (Tenn. 2006).

In short, even though procedural legislation generally applies retroactively, this general concept doesn’t apply when the case has progressed beyond the procedural stage impacted by the new law.

By my own analysis (disclaimer: I could be wrong), if a foreclosure was already in its publication stage before July 1, 2025, the new law doesn’t apply.

After more than 25 years, I’ve practiced through many changes in the law. In that time, I’ve learned that there are always growing pains, confusion, and a little bit of chaos in the days, weeks, and months after a big change.

What I’m saying is: Call your bankers and ask them if you have any foreclosures on their desks.

The Next Frontier of Foreclosure Litigation could be over “irregular” sales.

When Tenn. Code Ann. § 35-5-117 (originally § 35-5-118) was enacted in 2010, foreclosure lawyers were terrified.

This was the first time that the Tennessee legislature limited a creditor’s collection rights after a foreclosure. And the text was pretty ambiguous.

The statute created two general scenarios where a debtor could fight efforts by a creditor to obtain a deficiency judgment after a foreclosure:

Where the debtor can make “a showing of fraud, collusion, misconduct, or irregularity in the sale process” (see Tenn. Code Ann. § 35-5-117(b)); or
Where the debtor can “prove by a preponderance of the evidence that the property sold for an amount materially less than the fair market value of property at the time of the foreclosure sale” (see Tenn. Code Ann. § 35-5-117(c)).

At the time, foreclosure attorneys focused on what “materially less” than “fair market value” meant. The legislative history of the statute revealed that the lawmakers pulled that phrase from divorce law, where a “material change in circumstances” could impact child custody decisions. (Not much guidance on foreclosure cases.)

Ultimately, the appellate courts found that 88%-90% of the last known appraisal was sufficient, with later opinions approving 80% bids. With this “mathematical” clarity, foreclosing lenders had some guidance to avoid traps under 117(c).

But what about the part we all overlooked, Tenn. Code Ann. § 35-5-117(b)? We took that part for granted because, seriously, does any lender or foreclosure attorney commit fraud, collusion, misconduct, or irregularity in the sale process?

I don’t ask this in a rhetorical way. It’s an interesting question, and, in light of customary foreclosure practices in Tennessee, I think it’s ripe for litigation.

Here’s an example, which you can try at home. Grab your local newspaper (assuming one still exists in your area), and look for the foreclosure notices. Pick the first one you see, and call the foreclosure attorney and see what happens.

In my experience, it’s likely that:

The attorney/staff will never answer your call/email.
The attorney/staff will not call/email you back.
If you do hear back, you will not be provided with any information other than what is in the sale notice.
In many situations, you will not even get confirmation whether the sale is proceeding or not.
There will be sale terms announced in the minutes before the sale, but those are only rarely shared with interested parties in advance. Things like: Whether buyers need to bring cash. If so, how much. When will closing happen. Whether buyers need be pre-qualified.

These are fundamental questions that any reasonable bidder would expect to be provided. If an interested party doesn’t get these answers in advance, then they simply will not show up or, if they do, will be unprepared to bid. This uncertainty and failure to communicate leaves foreclosure bidding to the low-ball bidders, who make their money by exploiting the ambiguity (and low bid prices).

The failure to respond to interested parties’ reasonable questions will chill interest in a sale and will reduce the number of potential bidders. This could rise to the level of a violation of the foreclosure trustee’s duties under the Deed of Trust and could, possibly, render the sale “irregular.”

Foreclosing lenders in Tennessee should consider subpart 117(b) and how they or their counsel handle sales. Sure, no lender thinks their sale is “irregular,” but, on the right facts, you never know how a court will rule.

Recording a judgment lien during appeal period is not an “execution,” says Tennessee Court of Appeals

In March 2024, the Davidson County Chancery Court offered an answer to a longstanding collections legal question: Can a judgment creditor record a copy of its judgment as soon as it is signed by the Judge, or must the creditor wait 30 days?

In that case, the Chancery Court allowed the lien to stand, drawing the mechanical distinction between the processes of recording a judgment and enforcing that lien via execution sale. The answer didn’t end the debate, since the reasoning wasn’t fleshed out in a memorandum opinion and never considered at an appellate level.

As a creditor lawyer who knows the immense value of getting a judgment lien recorded as soon as possible, I saw the case as a good first step, but have been eager to see an appellate court discuss this issue.

In June 2024, the Tennessee Court of Appeals took that next step, in Justice v. Nelson, No. E2023-00407-COA-R3-CV, 2024 WL 3172263 (Tenn. Ct. App. June 26, 2024).

There, the Judgment Debtor posted a supersedeas / appeal bond after entry of the judgment, but the Judgment Creditor nevertheless recorded the judgment as a lien. Debtor demanded that the lien be removed as a “wrongful execution” because it was recorded while a bond was in place, and Creditor refused.

The Court of Appeals found in favor of the creditor, in fairly short order. “[F]iling a judgment lien does not constitute execution of a judgment.” Id. at *11. “Recordation of a judgment lien precedes execution.” Id.

Similar to the Davidson County Chancery Court’s reasoning, the appellate court drew a distinction between the processes of recording a lien and enforcing a lien, citing with approval the creditor’s analogy that “recording a judgment is ‘no more an execution than recording a deed of trust is a foreclosure’.” Id.

It’s a fine distinction, and one that I think deserved more attention from the appellate court. (I mean, “execution” is in the name of the rule of procedure that allows for recording a judgment as a lien.)

Recording a judgment as a lien is one of the most powerful collection tools in a creditor’s arsenal. It gives the creditor a lien on all property owned by the debtor in that county. The debtor can’t then transfer, refinance, or otherwise do anything with the property, unless the lien is paid or the creditor consents.

In considering whether the judgment debtor’s appeal was “baseless,” the Court notes the debtor “cites no Tennessee law to explain why it is a debatable question.” Id. at *11. The Court then cites text from ATS, Inc. v. Kent, 27 S.W.3d 923, 924 (Tenn. Ct. App. 1998), to support its conclusion, but that case didn’t consider this exact issue (the judgment in ATS was recorded about 46 days after entry).

With all due respect, I’ve practiced creditor rights law for more than 25 years, and lawyers ask me this exact question more than any other. That ATS decision offers hardly any guidance on this issue. In short, the creditor lawyer in me supports the outcome, but I’m disappointed with the reasoning.

Having said all that, there’s the answer: You absolutely can record your judgment as soon possible after entry.

This Defective Foreclosure Was the Scariest Thing I Saw on Halloween

I’ve called Tennessee’s non-judicial foreclosure process “a little scary.” It follows a byzantine process, is all paperwork, there’s no judge involved, and a single misstep can lead to your foreclosure being challenged.

Tennessee offers a unique pitfall for the unwary: It’s a “two track” state, meaning that a foreclosing lender must satisfy the requirements of both the Tennessee foreclosure statutes and the requirements agreed to by the parties in the Deed of Trust.

And those two tracks don’t always align.

On that note, let me tell you about the sale of a multi-million dollar property I watched on October 31 .

The Notice of Foreclosure Sale was first published in the Nashville Ledger on October 11, 2024 , and the sale was set for October 31, 2024 at 10AM at the Davidson County Courthouse.

That’s a tight timeline, since Tenn. Code Ann. § 35-5-101(b) requires that “The first publication shall be at least twenty (20) days previous to the sale.” In fact, by my own math, the 10/31 sale date fell on the twentieth day after publication, and I wondered whether, legally, this sale satisfied this statute (maybe, maybe not).

It didn’t matter, because I then read the Deed of Trust.

The Deed of Trust adds an extra day to § 35-5-101(b) minimum and requires that the first publication precede the sale by 21 days. This sale clearly didn’t satisfy that requirement.

About 6 bidders attended the sale, but none of them bid. The bank bought the commercial property for nearly $4 Million, and, in the Trustee’s Deed, recited the following:

Did the foreclosing lender double-check the Deed of Trust text? Is this a valid sale? Did good title convey from this sale? Did the failure to follow the terms of the Deed of Trust chill the bidders’ interest? Would this qualify as an “irregular” sale that would prevent collection on any unpaid debt pursuant to Tenn. Code Ann. § 35-5-117? Lots of interesting issues flowing from this sale.

I don’t like “interesting issues” on my foreclosures. When I prepare a sale notice, I check and double-check everything. When I’ve got a bunch of foreclosures set, you’ll find pen dots all over my calendar, from all the day-counting.

Foreclosures are complicated, and the failure to get it right can result in a challenge from all different directions. A borrower who doesn’t want to lose the property. A buyer who may not receive clear title. A lender who expects you to follow the process. A bankruptcy trustee who wants to blow it all up.

It’s a tricky process, and there’s too much risk when making an error. None of the goblins who visited my house later that night scared me more than what I saw happen at that foreclosure.

Can a Tennessee foreclosure be continued without written notice? We don’t know (yet).

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.

The Graceland Foreclosure shows the risks of Tennessee’s non-judicial foreclosure process.

I was born in Memphis and, of course, I’m an Elvis fan.

I was shocked to see–on the national news–that Graceland was facing foreclosure. A few days later, it all just…went away and explained as a hoax. I was surprised, but not totally surprised by these strange turn of events. It rarely happens, but foreclosures in Tennessee are ripe for exploitation by bad actors.

Here’s why: Tennessee is a non-judicial foreclosure state, and courts are rarely involved in the process.

At its most simple, Tenn. Code Ann. § 35-5-101 requires a lender to: (1) publish a notice of the sale 3 times in a local newspaper; and (2) send a copy of the notice to the property owner by certified mail. With just a bit of paperwork, voilà, you can sell somebody’s property.

It’s a cost efficient process for legitimate lenders, but it can be exploited by fraudsters and and paper terrorists, who present bogus claims and hope that their efforts will be ignored or not challenged.

Once a foreclosure is started, there are limited ways for a property owner to stop it, short of filing bankruptcy or filing a lawsuit to obtain an injunction pursuant to Tenn. Code Ann. § 29-23-201 (which is as complicated as it sounds–Graceland’s lawyers filed a 61 document to stop this sale).

graceland-complaint-for-declaratory-judgement-and-injuctive-relief Download

When I saw the news about Graceland’s foreclosure, I immediately looked up the Notice of Foreclosure Sale published by Naussany Investments and Private Lending LLC, and noticed red flags. The Deed of Trust had been not been recorded; the lender didn’t have an attorney; and the Notice of Sale lacked the level of detail a typical lender foreclosing on a historic, world-famous property would include.

In short, it all just seemed weird. In reality, it ended up being ten times weirder. It was all a scam, based on fraudulent documents, with a Nigerian based email scammer publicly claiming credit.

As bizarre as all this was, here’s the scary part: This could happen to anybody in a non-judicial foreclosure state. Here, the fraudsters were simply too ambitious, picking a famous property owned by a deep-pocketed and litigious owner.

What about properties by people who don’t understand the process, don’t read the newspaper and/or sign for certified mail, don’t have access to lawyers, or don’t have the money to fight? There are no official safeguards in the system to protect homeowners.

The newspaper doesn’t question the validity of the lender’s claims in submitted advertisements. The mailman doesn’t either. Once the sale is over, the local Register of Deeds just checks for valid notary stamps and payment of the transfer taxes. In some cases, by the time the owner discovers the fraud, there’s already a new deed recorded.

In 2016, I wrote an article for the Nashville Bar Journal titled, “Is your Potential Client a Nigerian King?” As part of that, I learned something wild about the email scammers’ unique business model: They expect to fail 99% of the time. They aren’t bothered by that fail rate, though, because they know that the upside to a single victory justifies all the work.

Sure, these scammers failed to foreclose on Graceland, but how many other times have they succeeded? And how many more times are they going to try?

Borrower Beware: The Growth of the Loan-To-Own Lender in Middle Tennessee

I have a question I ask clients when they ask me to foreclose on a property.

“Do you want the money or do you want the property?”

Some clients are baffled by the question. They are banks, they’ll tell me, and what are we going with a property? Who is going to evict the tenants, change the locks, make sure the pipes don’t burst, cut the grass and so on? The banks don’t want all that trouble. They want the money back, plain and simple.

But, in a hot real estate market like Nashville, I’ve noticed a new type of lender. I refer to them as “loan-to-own” lenders. They are making loans secured by real property, but they sometimes act like property investors.

My hunch is that, when making the decision to extend credit, the prospect of ending up owning the property is part of these lenders’ motivation in doing the deal. Hence, the “loan-to-own” nickname I give them. When their loans go bad, these lenders are happy to foreclose and take ownership of the land.

These are often lenders of last resort, for a property developer who can’t get credit (or more credit) from a traditional lender. These loans are often at far-above-market interest rates and usually on pretty short repayment terms. The typical customer is a developer who just needs a little bit more money or a bit more time, and who, out of desperation or arrogance, believes that the “big” sale is just 90-120 days away and is willing to overlook the costs and risks.

When the sale doesn’t happen or a payment is missed, these lenders pounce. In some cases, maybe the property developer can figure something out and the loan (and the hefty interest and fees) gets paid.

Or, worst case, the lender presses forward with a lender-advantageous foreclosure, i.e. one in which the lender who wants to win at the sale is the one who gets to set and enforce the sale terms.

Over the last few years, I’ve seen more lenders from Texas, Las Vegas, and California loaning money on development deals in Middle Tennessee. I’ve also noticed more of these lenders foreclosing, taking ownership, and then offering the properties for sale.

Having said all this, I don’t expect (or offer) much sympathy for the cash-strapped property prospectors. It’s simply an interesting development in the gold-rush ecosystem of the modern Nashville real estate market.

Update on Recent Changes to Tennessee’s Post-Eviction Judgment Enforcement

We’ve got some clarity on last month’s changes to Tenn. Code Ann. § 27-5-108(d), which have confused and annoyed both tenants and landlords. And, apparently, the Court Clerk’s Office.

As you’ll recall, effective July 1, 2023, the Tennessee Legislature changed the post-detainer judgment process to require that the Sheriff immediately go remove eviction defendants from property–even when the landlords hadn’t asked the Sheriff to.

Effective July 27, that’s no longer the process in Davidson County.

Per a press release, the Davidson County Circuit Court announced the process “will revert back to the process in place prior to July 1, 2023.”

What? The Legislature hasn’t changed the law; it seems that we’re just going ignore the new Tenn. Code Ann. § 27-5-108(d).

I totally agree with the outcome, but I also feel weird about the Clerk’s Office simply deciding that we’re not going to follow a very clear (yet really dumb) statute. I didn’t realize we had a choice.