Creditors Rights Tennessee – Creditors Rights 101

More Square Feet, More Billable Hours–Inside Nashville’s Office Space Boom

In the last 7 days, I’ve seen not one, but TWO news stories about law firms renting larger and fancier office spaces.

Maybe it was just a slow news week, but I didn’t realize that was something that justified a news story. (Is it not Super Lawyers or Best Lawyers (TM) season yet?)

Regardless, we’ve come a long way since the days of COVID, when law firms offered “flex” work arrangements, allowing lawyers and staff to work from, well, wherever they wanted to (as long as the work got done). It made financial sense (allowing some firms to downsize, reduce costs, and eliminate those wasteful “corner” offices, in favor of uniform office sizes and more collaborative space) and also met a younger generation of professionals (i.e. the non-old-white guys) where they were at.

Law firms are creatures of tradition, and, as Colliers‘ recently released 2026 Law Firm Trends Report shows, it hasn’t taken long for the old timers to summon the associates back to to their desks. By the end of 2026, Colliers predicts that law firms will expect staff to spend up to 70% of the work week in the actual office.

As for Nashville, Colliers notes the rapid (and rabid) influx of global law firms into the market, which has increased competition for the best office space. Per Colliers, Nashville’s average Class A “asking” rent is $40.40 per square foot.

Having seen the insanely high hourly rates that these new law firms are injecting into the local market, I have no doubt they can afford it.

It seems that we’ve returned to flashy addresses as a signifier of the quality of legal services. The argument for this old fashioned approach is, of course, that “opulent physical spaces suggest success and prestige, which will result in more work from clients.” Said another way, “our marble encrusted tables and leather bound volumes will strike fear in the hearts of enemies and admiration from clients.”

And, yes, the above link takes you to a post by me from 2021, bragging about my WeWork office and how the then-new trends in lawyer office space and lower overhead were so wonderful. (Yes, I’m biased.)

Oh well. The Nashville legal market continues to evolve. But expensive offices, long term leases, and more time at your desk to pay for all that? No thanks.

A few weeks ago, a Nashville lawyer posted a picture on his LinkedIn page. He was visiting his big firm’s Miami office, taking all-day depositions. He posted a picture from the conference room, showing the view out the window.

In the picture, past the visible reflection of the rows of fluorescent lights, you could see people in the distance, having fun on the beach.

That “maximum indebtedness” line on your deed of trust only matters to the taxman, not the borrower.

By the time a loan gets referred to me for foreclosure–after we add interest (sometimes at a default rate), collection costs (attorney fees), and foreclosure expenses (somehow, newspaper publications have gotten more expensive)–the unpaid debt sometimes exceeds the original amount of the deed of trust.

This can create confusion, because my bank’s deed of trust will always include a line that says: “Maximum principal indebtedness for Tennessee recording tax purposes is $______.”

Are we capped at that “maximum” amount? Can we really enforce those other amounts? What if we have cross-collateralized debts that adds other accounts?

All good questions, since the text literally says “maximum indebtedness.” Deeds of trust are contracts, and words in contracts usually mean what they say.

Here, not so much.

This is specific language that is required on all Tennessee deeds of trust per Tenn. Code Ann. § 67-4-409(b)(6), and it exists only for computing taxes. As the statute explains, the statement “may be relied upon only by the department of revenue and by the receiving official charged with the duty of recordation and collection of tax, and such statement shall not constitute notice of any kind to any other party of the amount of indebtedness secured by the instrument.”

Tenn. Code Ann. § 67-4-409(b)(11)(A) doubles down on this interpretation, by expressly providing that “nonpayment or underpayment” of the tax “shall not affect or impair the effectiveness, validity, priority, of enforceability of the security interest or lien…”

This same reasoning applies, even when a bank is enforcing other debts pursuant to a cross-collateralization provision (meaning the deed of trust can also secure past, present, and other future debts). See Tenn. Code Ann. § 47-28-102. Your deed of trust with a $100,000 maximum for tax purposes can, conceivably, secure debts that are ten times that amount.

But, as a warning, be sure to look for text imposing a maximum debt limit text in the body of the deed of trust.

For example, if the deed of trust contains a specific cap that is embodied in the substantive text, it’s considered part of the agreement and will be enforced (something like a provision securing a note “or for any renewals, extensions, or additional advances not to exceed a total indebtedness of $65,000.00”). Those words mean what they say.

Just like my first grade teacher said, there are no dumb questions. Here, this one confuses lawyers and bankers all day long.

Two Traps to Avoid When Foreclosing: Redemption and Exemption Rights

When a lender refers me a deed of trust for foreclosure, there are a lot of things I immediately look for. Is the deed of trust recorded? Is this recording in the correct county? Is it signed? Is the collateral description correct? Does the deed of trust even allow foreclosures? (You’d be surprised how often these easy parts get messed up.)

Finally, are the borrower’s redemption and exemption rights waived?

These last ones are easy to overlook, but really important. In fact, I’ve never foreclosed real property on deed of trust without those waivers.

Remember, deeds of trust are contracts between a borrower and a lender. In Tennessee, when borrowers sign a deed of trust, they’re not just pledging their property as collateral—they’re often agreeing to give up certain statutory protections that would otherwise apply if things go sideways.

Two of the most important rights are the right of redemption and the homestead exemption.

The right of redemption, found in Tenn. Code Ann. § 66-8-101, would otherwise allow a borrower two years to reclaim the property after a foreclosure sale by paying the debt. This right to “buy back” the property would hardly ever be exercised, but the mere fact that it existed would cloud the post-foreclosure title and limit the re-sale value of foreclosed properties. This waiver allows the lender (or foreclosure purchaser) to obtain immediate, final title upon completion of the foreclosure sale, eliminating post-sale uncertainty.

The homestead exemption, at Tenn. Code Ann. § 26-2-301, is designed to protect a portion of a homeowner’s equity from creditors. When things go absolutely wrong for a homeowner and they lose their house, the law allows a borrower to protect up to $35,000 before it goes to certain creditors.

As indicated in each of these statutes, both of these rights can be waived in a deed of trust, allowing a mortgage lender the ability to foreclose with clear title.

The absence of these waivers do not prevent a sale, but they drastically change the outlook for the foreclosure process.

Nashville Honky-Tonks, Tennessee Two Steps, and a Triple Net Lease

Local Nashville news has been abuzz about the huge tax bill faced by Lower Broadway’s Acme Feed & Seed for the 2025 tax year. Located at 101 Broadway, at the start of the historic Broadway honky-tonks and overlooking the Cumberland River, it’s a prime property on a stretch that has continuously set (and re-set) new records for property values.

For the past 5-7 years, asking prices for Broadway honky-tonks have reached unimaginable heights. You can buy Jelly Roll’s bar for $100Million. Jon Bon Jovi’s is being offered for $130Million.

That’s great for the property owners’ balance sheets, but it’s bad news when the Metro Nashville Assessor starts paying attention. (Increases in tax appraisals generally mean higher taxes.)

2025 Metro Real Property taxes come due later this week, and, if this past week’s news is any indication, nobody is more worried about their 2025 tax bill than Tom Morales, the owner of Acme Feed and Seed.

As a result of the recent re-appraisals, for 2025, the property is appraised at $50,049,200, a huge jump from 2021’s value of $9,577,900.

The tax bill? $589,259.28 (and has not yet been paid).

The public response has been mixed. Lots of people won’t ever feel sorry for somebody whose property value goes up $40+ million dollars (and would fetch far more in a private sale), but those people are missing a key point: Tom Morales doesn’t own the property, per the Quitclaim Deed.

Why, then, would a renter care about the property taxes?

My guess is that he probably signed a triple net lease (often written as “NNN”).

In simple terms, a triple net lease is a lease where the tenant pays not just “base” monthly rent to the landlord, but also all of the property’s operating expenses: real estate taxes, insurance, and common area or maintenance costs. In short, the landlord owns the building, but, per the lease, the tenant agrees to pay all of the expenses of the building, usually in 1/12th increments throughout the year as “additional” rent.

If you don’t work in the commercial leasing realm, it probably blows your mind to think that, as a tenant, you’d be responsible for all of the expenses of a property. Why not just buy the building yourself?

It’s a common leasing structure. From the tenant’s perspective, they can operate out of property, without the cash, credit, or long-term obligations of purchasing an expensive building. Acme Feed and Seed may not have had the credit (or desire) to own a $50 Million property, but it can get it via lease. And what a property it is: On New Year’s Eve, nearly 250,000 people rang in the new year at Acme’s front door, with TV and media coverage you can’t buy.

From the owner’s perspective, a deal like this ties up lots of cash or credit on an fixed asset, but, at least, they don’t come deeper out of pocket for the operating expenses. It sounds like a great deal, sure, but being a landlord still carries risk. Ever hear of a bar going out of business and being vacant? Who pays the mortgage, taxes, and expenses in that situation?

At the end of the day, a commercial lease is a contract, and the two parties are free to agree to whatever they want in a lease. They can allocate taxes, insurance, and maintenance responsibilities in any way, and a Tennessee court will hold them to that bargain, no matter how unfair the unforeseen results can be. A contract will be enforced according to its plain language.

With that in mind, for any tenant considering a triple net lease on a property with potential for this sort of wild change, I’d recommend that the tenant consider a provision to mitigate the risk this could happen.

No landlord would be willing to voluntarily bear this tax increase, especially if the tenant retains all of the use and benefit of such a valuable property. (From the landlord’s perspective, the tenant is, now, paying under-market rent, as if the building was still worth a paltry $10Million, right?)

Instead, this lease could have included a provision that allows the tenant to opt out and terminate the lease, if the tenant could prove this increase in the tax cost was a material change. In that situation, the tenant would have an option to get out of the lease and, on the other side, the landlord would be freed from “the burden” of being bound by an under-market lease and could, then, attempt to enter into a new lease based on the $50MM valuation or capture the value via sale. (In short, the landlord would probably happily terminate the lease and see what the free market says about all of this.)

Without that, a tenant can only hope the landlord will pitch in and help with this cost. If I had to guess, all of this hit the local news after the landlord declined to pay the tax bill.

Broadway has changed a lot since Acme first opened their doors 15 years ago. Even the best commercial real estate attorneys could not have foreseen this when drafting this lease, but it’s something to think about on the next honky-tonk lease.

Will an “early” Motion for Default be granted? One Trial Court said no.

One of the frustrating parts of being a lawyer (there are many) is that, sometimes, you can’t get your case set for hearing as fast as you (or your client) would like it to be. The legal system moves at its own pace, and it’s generally not built for speed.

This is especially true in mid-March (spring break) and mid-October (fall break/judicial conference), when court dockets might be unavailable or closed.

Time is money for my clients, and they tend to want to get in front of the judge as soon as possible. One or two weeks of closed dockets can add 30-60 days of delay.

Under Tennessee law, if a defendant in a lawsuit fails to respond or otherwise defend “as provided by these rules,” the plaintiff can get a judgment by default. See Tenn. R. Civ. P. 55.01. This generally means that, after service of a lawsuit, a defendant must file an answer within 30 days. If they don’t, you file a motion saying that and, generally, you win.

For years, I had this theoretical question: If a plaintiff filed a motion for default prospectively–before the answer deadline had expired–and, if the defendant failed to answer by the 30 day deadline, would a judgment by default be entered?

This spring, I got my answer.

I had a case where defendant’s answer date was approaching, but the court’s motion calendar showed dockets in late March…and then mid-May. Yikes!

The deadline for my defendants to answer was March 15. March 14 was the deadline to get my Motion for Default heard on that last, March 28 docket. Should I file a day early (and see if they file an answer) or should I wait?

I got my clarity: My Motion was denied, with the text of the order noting that my motion was filed “twenty-nine days after Defendants were served.” As a result, the Motion “was untimely since less than thirty days elapsed between the date of service and the date Plaintiff filed its motion.”

In the end, then, it didn’t matter that the defendants never filed an answer, including between the filing date (March 14) and the scheduled hearing date (March 28). The original motion was premised on a condition that had not yet occurred.

As a result, upon receipt of the order, I filed a new Motion on March 28, set it for May 15, and got my default judgment then.

A Final General Sessions Judgment Can Be Enforced in Other States as a Foreign Judgment

When it’s an option, I always encourage clients to file lawsuits in Tennessee’s General Sessions Courts. Justice moves fast, efficiently, and cheap. The lawsuit you file today could be set for hearing next week; executions on the judgment could go out by the end of the month. Zip zap.

Nevertheless, lawyers often express uncertainty about whether a judgment from General Sessions Court–not a “court of record”–is enforceable in another state under under that state’s version of the Uniform Enforcement of Foreign Judgments Act (UEFJA).

I think they are. Here’s why.

If your General Sessions judgment is final and enforceable in Tennessee, why can’t you take to another state? “Foreign judgment” means “any judgment, decree, or order of a court of the United States or of any other court which is entitled to full faith and credit.” See Tenn. Code Ann. § 26-6-103.

In layman terms, it’s a judgment from another U.S. state court. Based on that, a Tennessee General Sessions judgment qualifies so long as the rendering court had jurisdiction and the judgment is valid and final, right?

“Final” in General Sessions Court is determined under Tenn. Code Ann. § 27-5-108, which says generally that any judgment that isn’t appealed within ten days. If you can garnish a bank account and wages on the judgment, why can’t you take it to another state?

So, yes, maybe small claims court has a more “vibrant” cast of characters than your typical courtroom, but that doesn’t mean the judgements granted there have any less legal impact.

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.

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.