New Banks Opening in Tennessee is Great News for Creditor Lawyers

Nashville is a hot market right now.  One statistic I’ve seen says that anywhere from 70 to 100 new people move to the Nashville area every day.

And, it’s not just people. It’s also businesses. And banks. Today, the Nashville Business Journal reports that JPMorgan Chase is opening its first standalone branch in Nashville. Earlier this year, PNC Bank announced its own expansion into the Nashville market.

This great news for bank lawyers in Nashville, since more banks means more loans for lawyers to work on (both good and bad loans–we’ll take either).

And, it is particularly good news for Tennessee creditor rights lawyers when a national bank moves into Tennessee. As I mentioned a few years ago, it introduces new assets into Tennessee for garnishments and bank levies.

Like I said in that March 2018 post:

What if the debtor has all his assets in that foreign state, but he banks at a national bank with offices all over the country? And what if that bank has a branch in Tennessee? The answer is that you can levy on that bank account.

So, I say “Welcome” to all these new banks coming to Tennessee.

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Good Article on Tennessee’s Post-Foreclosure Deficiency Statute

This month’s Tennessee Bar Association Journal has a good article on the new post-foreclosure deficiency statute, Tenn. Code Ann. § 35-5-118, titled “Deficiency Judgments after Foreclosure Sales.”

The article provides a detailed review of the cases construing that very ambiguous statute, which was enacted in 2010 and became effective September 1, 2010. Here’s what I wrote about the new law, back in 2010.

As you’ll recall, I litigated and won the first ever case construing the new law, in December 2012. My case was the GreenBank v. Sterling Ventures case, which is analyzed in the article.

If you’re a banker, a bank lawyer, or a defense lawyer helping some borrower clients, be sure to look at this article. It’s a weird law, and, as the last few paragraphs of the article suggest, there’s still a lot of things that are unknown/unclear about how Tennessee courts are going to apply it in the future.

 

7% and Rising: Tennessee’s Post-Judgment Interest Rate Continues to Go Up

About this time last year, I noted that the statutory rate of interest on Tennessee judgments was continuing to increase.  At the time, the rate was 6.25%.

After bumping up to 6.5% in January 2018, it has now risen again to 7.0% (effective July 1, 2018).

As you’ll recall from my post in February 2013, Tennessee switched from a flat-rate of 10% to a variable rate under the (then) new version of Tenn. Code Ann. § 47-14-121.

As a creditor, this is great news. As a creditor lawyer, it’s kind of a pain in the neck.

Now, when I’m asked to prepare a payoff, I have to check the Tennessee Administrative Office of the Courts website to see what the applicable rate is. Then, for any increases or decreases, I have to adjust my math for that time period.

Borrower Beware: They look like Checks but act like Loans.

Nashville’s Fox 17 news asked me to comment on their news story about lending companies that target low income borrowers.

The news report focused on one lending practice as particularly unscrupulous: the unsolicited check loan. These are sometimes called “live loan” checks.  Maybe you’ve received one in the mail. They look exactly like a check, made payable to you, and all you have to do is take it to your bank and, boom, you’ve got cash.

And…you’ve got a new loan that probably has very bad interest rates and onerous terms.

You can click on the news segment above, but, ultimately, I gave this warning:

There’s no such thing as free money, and so if someone has sent you a check unsolicited in the mail, that’s where your radar should go up. They do take advantage of someone who needs something. They have a resource, cash, that these people over here desperately need.

In the end, I’m sympathetic to the borrower, but also acknowledge a really hard fact: These type of credit vehicles may be the only life-line some borrowers have to pay rent, get medical treatment, or obtain necessary goods and services. And that’s not a problem created by an unscrupulous lender, but a part of the income inequality of modern society.

Don’t get me wrong, I’m not defending the lenders here, but I want to make sure that, while most of us are alarmed by these lending practices, we also realize that exposing these practices doesn’t, by itself, solve the deeper issues.

Poor people face a lack of access to funds for essential goods, services, and needs that is completely under-served and ignored. We may scorn the lenders for exploiting that need and call it predatory, but we also lack resources to consider alternate ways to address those needs.

And that’s where I end my tidy little blog post.

What Happens to Stale, Unserved General Sessions Lawsuits? Some Get Dismissed.

I was doing some general sessions legal research today. And, no, that isn’t a mis-print.

There are some really interesting legal issues that come up in small claims court.

Today, I found a corollary to Tenn. R. Civ. P. 3, which I blogged about a few years back. Rule 3 says that un-issued and un-served Summonses may not preserve the statute of limitations.

The similar rule in sessions court is Tenn. Code Ann. § 16-15-710, which provides:

The suing out of a warrant is the commencement of a civil action within the meaning of this title, whether it is served or not; but if the process is returned unserved, plaintiff, if plaintiff wishes to rely on the original commencement as a bar to the running of a statute of limitations, must either prosecute and continue the action by applying for and obtaining new process from time to time, each new process to be obtained within nine (9) months from return unserved of the previous process, or plaintiff must recommence the action within one (1) year after the return of the initial process not served.

So, in short, if you want to rely on the date you filed your lawsuit, then you have to make sure you get a new Alias Summons issued within 9 months of your last, unserved warrant.

If you don’t, you may have to re-file your entire lawsuit. Yikes.

How to Conduct a Sheriff’s Sale of Real Property in Tennessee: It Depends on Who You Ask

Many years ago, the Tennessee Bar Journal ran an article by Knoxville legal luminary Don Paine called “Practical Advice for Collecting a Judgment.”  Clearly, this article got my attention.

In it, Paine outlines how to obtain a judgment lien on real property and how to ultimately sell the property pursuant to that lien. His analysis begins and ends with Tenn. R. Civ. P. 69, which provides that a judgment lien creditor shall file a motion requesting that the court order a sale. In fact, Rule 69.07(4) specifically says “[a]s long as a judgment lien is effective, no levy is necessary”–just file a Motion.

Rule 67.04 provides a specific procedure for a Sheriff’s Sale of real property (i.e. 30 days advance notice; 3 total publications; distribution of proceeds).

But, elsewhere in Tennessee statutes, there’s a different procedure for sheriff’s execution sales of real property. Tenn. Code Ann. § 26-5-101 lays out its own set of rules and requirements, which are differ in minor ways to Rule 69 (i.e. 20 days advance notice).

And, having done my own Sheriff’s Sale earlier this summer, I chuckled when I saw Paine’s article. After I had a Rule 69.07 Motion granted and asked the Clerk to initiate the sale process, the Clerk and Master on my case ignored my Order Granting Motion for Sale, telling me, instead, I need to accomplish the sale by levy and execution.

Side note: One of the things that makes collections interesting is that you’re not just dealing with a Judge anymore, you’re dealing with a Clerk, who may have their own opinions about how things are done.

So, how do you reconcile these differing procedures? And, trust me, these mechanical / procedural issues come up all the time.

Paine’s answer is simple: Under Tenn. Code Ann. § 16-3-406, when a Rule is in conflict with any other law, the Rule prevails.

But, as a practical matter, try telling that to the Clerk, when they say “You need to file a Levy.”

On my sale, here’s what I did: I did both. I had an Order and then issued a Levy on the real property, pursuant to my Order. When the requirements differed, I used the procedure that complied with both.

Sometimes, being right is less important than getting the job done.

Tennessee Law on Sheriff’s Sales Can be Confusing, but Worth the Work

A very long time ago, I wrote that judgment collections may require patience but that, fortunately, Tennessee judgments are valid for ten years.

So, while you may be dealing with a debtor without any money now, keep in mind that this economy can shift for the good, as quick as it went bad. In collections, patience can lead to money.

That was in July 2010, and, man-oh-man, has Nashville’s economy rebounded. If you’ve followed my other advice, way back when, you have already ordered a certified copy of your judgment and recorded it as a lien in the real property records.

So, fast-forward to 2017. If you take that old judgment lien and add in 7-8 years’ worth of property appreciation, maybe it’s time for you to consider conducting a sheriff’s sale of real property pursuant to your judgment lien.

In Tennessee, Sheriff’s Sales are governed by Tenn. R. Civ. P. 69.07(4) and Tenn. Code Ann. § 26-5-101, et. seq. At a recent seminar, I was asked which of the two lines of authority controlled the process: Rule 69; or the Tennessee Code?

The correct answer is, unfortunately, that nobody is entirely sure. So, I guess, the answer is that both control the process.

As a practical matter, when I’m conducting a sheriff’s sale of real property to enforce a judgment, I follow all of the requirements under Rule 69 and also under Tenn. Code Ann. § 26-5-101. Sure, that makes for a lot of “hoops” to jump through, but the hoops are never contradictory.

Given the appreciation in property values, sheriff’s sales can be a very effective collection method.