State Foreclosure Law Library

tennessee

18 min read

Tennessee — Tax & Mortgage Foreclosure

Legal information, not legal advice. Verify against the cited primary sources before acting. Last verified: 2026-06-01.

Tennessee enforces delinquent property tax liens through a judicial proceeding in rem in chancery court, ending in a tax sale of the land itself (a tax deed), not a lien certificate. The right to redeem and the right to claim surplus (“excess sale proceeds”) are both post-confirmation, statutory rights administered by the same chancery court. Mortgage foreclosure is overwhelmingly non-judicial (power-of-sale under a deed of trust). See right-of-redemption, surplus-funds, tyler-v-hennepin-county.

0. Identity & Classification

  • Recording unit: county (95 counties)
  • Tax sale type: tax deed (the parcel is sold, subject to a statutory post-sale right of redemption — functionally a redeemable deed). The whole proceeding “from the assessment to sale for delinquency, shall be a proceeding in rem.” Tenn. Code Ann. § 67-5-2103 (per CTAS/tncourts delinquent-tax materials, source below).
  • Tax foreclosure process: judicial — the delinquent-tax attorney files suit in chancery court (Tenn. Code Ann. § 67-5-2405; prosecuted per chancery rules, § 67-5-2414), the court orders the property sold, and the court enters an order confirming the sale.
  • Mortgage foreclosure process: non-judicial (power of sale, Tenn. Code Ann. tit. 35, ch. 5) is the norm; judicial foreclosure is available but rare.
  • Selling authority: clerk & master / chancery court under court decree (the county trustee is the tax collector; the sale is judicial). For mortgages, the trustee under the deed of trust.
  • Statutory home: Tenn. Code Ann. Title 67, Chapter 5 — Property Taxes (delinquency Part 24 §§ 67-5-2401 et seq.; tax-lien sale Part 25 §§ 67-5-2501 et seq.; redemption & excess proceeds Part 27 §§ 67-5-2701–2703). https://law.justia.com/codes/tennessee/title-67/chapter-5/
  • Tyler v. Hennepin compliance: compliant — Tennessee already statutorily returns surplus to the former owner/junior interests via the § 67-5-2702 excess- proceeds motion, with any residue going to unclaimed property (held for the owner), not retained by the taxing county. A 2024 Court of Appeals decision applied § 67-5-2702 to distribute surplus to a lienholder, with the residual waterfall ending at the former owner (§ 67-5-2702(c)(4)) — see tyler-v-hennepin-county, module 8.

1. Tax Sale Mechanics

  • What is sold: the land (tax deed), sold “for cash, subject to the equity of redemption.” The clerk bids the amount owed if no third party bids higher. (CTAS, The Tax Sale; tncourts delinquent-tax materials, sources below.)
  • Bidding method: highest-bid (premium) auction — public sale; if the bid exceeds taxes/penalty/interest/costs, the difference becomes excess sale proceeds subject to § 67-5-2702.
  • Interest / penalty: statutory delinquency interest and penalty on the tax debt accrue under Title 67, Ch. 5; on redemption, the redeemer additionally pays interest at 12% per annum on the purchaser’s entire purchase price from payment to the filing of the motion to redeem. Tenn. Code Ann. § 67-5-2701(b). (Statutory text confirmed via CTAS Redemption + statute search, sources below.)
  • Minimum bid composition: delinquent taxes + penalty + interest + court costs + delinquent-tax attorney fees (proceeds are applied first to attorney fees, then suit costs, then to the state/county/municipality per the decree). (CTAS Tax Sale.)
  • Sale frequency / typical month: suits filed after Feb. 1 and not later than Apr. 1 (§ 67-5-2405); sales occur on the chancery court’s calendar (varies by county — see county pages). needs_verification: a single statewide “typical month.”
  • Venue: in person at the courthouse historically; some counties now use online decree-sale platforms (county-specific — verify on county pages).
  • Platform vendors: county-specific (e.g., GovEase, RealAuction in some counties). needs_verification: per-county vendor list belongs on county pages.
  • Registration / deposit: county-specific terms; bidders who have a “moral or legal obligation to pay the taxes” on the parcel and fiduciaries of the taxpayer are disqualified from bidding. (CTAS Tax Sale.)
  • Subsequent taxes (“subs”): the tax-sale purchaser who pays post-sale ad valorem taxes may recover them from a redeemer as a “lawful charge” (§ 67-5-2701(e)).

2. Right of Redemption → see right-of-redemption

  • Pre-sale right: the taxpayer may stop the sale at any time before it by paying taxes, interest, penalties, and costs (“equity of redemption”). (CTAS Tax Sale.)
  • Post-sale period — variable, set by length of delinquency (Tenn. Code Ann. § 67-5-2701(a)), measured from entry of the order confirming the sale:
    • delinquency ≤ 5 years → 1 year;
    • > 5 but < 8 years → 180 days;
    • ≥ 8 years → 90 days;
    • vacant/abandoned property → 30 days (purchaser must prove abandonment via 3 periodic inspections over a 2-month period at different times of day, § 67-5-2701(a)(2)–(3)).
  • Runs from: date of entry of the order confirming the sale; “in no event … more than one (1) year from that date.” § 67-5-2701(a)(1)(A).
  • Who may redeem: a right to redeem vests in all interested persons upon confirmation. § 67-5-2701(a)(1). “Interested person” = a person owning an interest in the parcel, a lienholder, or a lienholder’s assignee. § 67-5-2502(c). The right is transferable (treated as an interest in land), and anyone may furnish the funds for a redeemer. (CTAS/tncourts materials + case law, module 8.)
  • Amount formula: before filing the motion to redeem, pay the clerk the total delinquent taxes + penalty + interest + court costs plus 12% per annum on the purchaser’s entire purchase price; the purchaser may then move for “lawful charges” within 30 days of the mailing of the notice of redemption. § 67-5-2701(b),(d).
  • Lawful charges (six items, § 67-5-2701(e)): (1) additional ad valorem taxes paid; (2) insurance and reasonable improvements; (3) costs to avoid permissive waste; (4) costs of compliance with code/administrative orders; (5) HOA dues; (6) additional interest. A recording fee is not a lawful charge.
  • Procedure: redeemer files a motion to redeem (describing parcel, sale and confirmation dates, and the basis to redeem) after paying the clerk; purchaser may waive, protest (motion to protest within 30 days of notice of redemption), or seek lawful charges. § 67-5-2701(c)–(e).
  • Extinguishment / effect of redemption: on an order declaring redemption complete, title is divested out of the purchaser, the clerk refunds the purchase money and pays sums due, and “the interests of the interested persons are restored to that state which existed as of the date of entry of the order confirming sale”; a lienholder who redeems may thereafter foreclose. § 67-5-2701(n).
  • Special tolling: general bankruptcy/bankruptcy-automatic-stay and scra-protections protections apply; Tennessee’s chapter does not extend the period for minors/incompetents beyond the statutory scale. needs_verification: any disability-based tolling specific to § 67-5-2701.

3. Surplus / Excess Proceeds → see surplus-funds, third-party-recovery-rules

  • Belongs to: a priority waterfall ending with the former owner; never retained by the county (Tyler-compliant). Governed by Tenn. Code Ann. § 67-5-2702 (text quoted verbatim in the verified 2024 Court of Appeals opinion, module 8 source).
  • Claim waterfall (§ 67-5-2702(c)), paid to each party that proves its claim:
    1. the tax entity prosecuting the sale, for remaining/subsequent taxes that are a lien on the property;
    2. any lienholder (public or private) holding a claim at the time of the tax sale, per applicable lien priorities;
    3. any lienholder holding a claim arising after the tax sale, per priority;
    4. the taxpayer, to the extent of its interest at the time of the sale — provided the taxpayer was a defendant in the underlying action or acquired by will or intestate succession the interest of a defendant-taxpayer;
    5. any remaining proceeds are subject to the Uniform Unclaimed Property Act (Title 66, Ch. 29, Part 1).
  • Filing venue: motion in the chancery court in which the delinquent-tax proceeding is pending. § 67-5-2702(a).
  • Who may file: “any interested person” (owner-interest holder, lienholder, or lienholder’s assignee, § 67-5-2502(c)) after entry of the order confirming sale. A claimant asserting ownership must record the document of ownership or an affidavit of heirship at least 30 days before the hearing or forfeit notice.
  • Claim deadline / escheat: a motion may be filed until the funds are actually forwarded to the state under the Unclaimed Property Act. The presumption of abandonment does not arise until the final determination of all redemption/excess- proceeds motions or one (1) year after the redemption period expires, whichever is later. § 67-5-2702(c)(5). After escheat the funds are reclaimable from the state treasurer under the unclaimed-property regime (Title 66, Ch. 29).
  • Documentation required: motion; service on all interested persons ≥ 30 days before hearing (Tenn. R. Civ. P. service for non-new-claim motions); recorded deed/ affidavit of heirship for ownership claimants; lien proof for lienholders.
  • Recovery-in-error remedy: an interested person who, without fault, did not get notice and was underpaid has an exclusive right of action against the over-paid party to recover the erroneous payment, and may move for relief from the disbursement order. § 67-5-2702 (recovery-of-error subsection).
  • Notice to former owner required? Yes — the motion must be served on all interested persons; and the tax-sale itself requires diligent statutory notice (module 6).
  • Third-party (surplus-recovery agent) rules:
    • fee_cap_pct: needs_verification — Tennessee’s delinquent-tax chapter does not set a percentage cap on private surplus-recovery / “finder” fees; whether a separate consumer-protection finder-fee cap applies is unverified against a retrieved primary source.
    • licensing_required: needs_verification — no licensing requirement located in a retrieved primary source.
    • assignment_of_claim_allowed: yes (effectively) — the redemption right is a transferable interest in land and a lienholder’s assignee is an “interested person” eligible to claim (§ 67-5-2502(c)); assignment of the excess-proceeds claim specifically is needs_verification.
    • cooling_off_period / contract_disclosure_rules / prohibited_practices: needs_verification — not located in a retrieved primary source.
    • A tax-sale purchaser may NOT claim the excess sale proceeds. (tncourts delinquent-tax materials, source below.)

4. Mortgage Foreclosure

  • Process: non-judicial power-of-sale under a deed of trust is standard, governed by Tenn. Code Ann. Title 35, Chapter 5 (advertisement/notice of sale). Judicial foreclosure exists but is uncommon. (Secondary sources; primary statute cite below — exact section text needs_verification.)
  • Timeline: notice of sale must be published and mailed to the borrower; the customary requirement is publication and ≥ ~30 days’ notice. Tenn. Code Ann. § 35-5-101 et seq. needs_verification: exact publication count/days against the retrieved statute text.
  • Reinstatement / pre-sale cure: governed by the deed-of-trust contract; Tennessee has no general statutory reinstatement mandate. needs_verification.
  • Redemption after sale: Tennessee provides a statutory 2-year redemption after a foreclosure sale (Tenn. Code Ann. § 66-8-101 et seq.), but it is routinely waived in the deed of trust and so rarely available in practice. needs_verification: exact § 66-8-101 text and waiver mechanics.
  • Deficiency judgment: allowed; Tennessee recognizes a fair-value / materially- less-than-fair-market-value defense limiting the deficiency (Tenn. Code Ann. § 35-5-118). needs_verification: exact statutory standard.
  • Surplus distribution: foreclosure surplus goes to junior lienholders then the borrower (common-law “first in time, first in right”; see Andrews v. Fifth Third Bank, module 8). No § 67-5-2702-style statute governs foreclosure surplus.
  • Sale officer: trustee named in the deed of trust (or substitute trustee).

5. Sale Procedure Playbooks

  • Chancery (tax) sale — ordered steps → see treasurer-sale:
    1. Trustee certifies delinquents; delinquent-tax attorney files suit in chancery (after Feb. 1, by Apr. 1). § 67-5-2405.
    2. Notice of intent to sue published once weekly for two consecutive weeks in January; notice to owner. §§ 67-5-2401, 67-5-2402, 67-5-2415.
    3. In-rem proceeding; constructive notice to all interested persons on filing. § 67-5-2103.
    4. Default judgment; court orders parcel sold “subject to the equity of redemption.”
    5. Notice of sale mailed to the owner’s address of record and published; diligent search of four offices (module 6). § 67-5-2502.
    6. Public sale; high bidder takes; clerk bids the debt if no higher bid.
    7. Order confirming sale entered → starts the redemption clock and unlocks excess-proceeds and possession rights.
    8. Redemption window runs; then disbursement of excess proceeds (§ 67-5-2702).
  • Mortgage trustee’s sale — ordered steps → see sheriff-sale: default → notice of sale (publication + mailing, Title 35 Ch. 5) → public auction by trustee → trustee’s deed → surplus to juniors/borrower. (Non-judicial; no sheriff.)
  • Notice requirements: tax suit — published once/week for two consecutive weeks (Jan.); sale notice mailed + published; diligent search of the assessor, trustee, register of deeds, and the office where wills are recorded (§ 67-5-2502(c)(2)).
  • Upset bid / confirmation: the court order confirming the sale is the operative confirmation; Tennessee has no North-Carolina-style upset-bid period.
  • Payment terms: “for cash” at the sale (county-specific deposit rules).
  • Deed issued: a tax deed issues after confirmation; it conveys subject to the redemption right until that right expires, and possession transfers to the purchaser on the confirmation order (§ 67-5-2503). Warranty level: no warranty (tax deed).

6. Due Process & Notice → see due-process-notice

  • Standard: Fourteenth Amendment due process — notice “reasonably calculated” to reach interested persons (mullane-v-central-hanover). Tennessee requires a diligent effort to give notice but does not require actual receipt, and the county need only search the four offices listed in § 67-5-2502(c)(2) (assessor, trustee, register of deeds, will-recording office). After a reasonable search, service by publication is effective.
  • Required attempts: record search of the four statutory offices; mailing to the address of record; publication if the address cannot be found.
  • Consequence of defective notice: an order confirming a sale is voidable (not automatically void) and may be set aside on the merits; a suit to invalidate must be brought within 1 year of the confirmation order (extendable to 1 year after reasonable discovery, absolute outer limit 3 years). § 67-5-2504.
  • Leading cases: maccaughelty-v-sherrod (publication effective after statutory search), jones-v-flowers, mennonite-v-adams, mullane-v-central-hanover.

7. Title & Marketability

  • Deed warranty level: none — tax deed conveys whatever the in-rem proceeding divested; no covenants of warranty.
  • Marketable immediately? No — title is encumbered by the redemption right until it expires, and by the § 67-5-2504 challenge window.
  • Quiet title required? Commonly advisable; most title insurers will not insure until the redemption period and the § 67-5-2504 limitations periods have run (often resolved by a quiet-title action). needs_verification: insurer practice citation.
  • SOL to challenge deed: 1 year from the confirmation order, extendable to 1 year after reasonable discovery, never more than 3 years. § 67-5-2504.
  • Title insurance availability: generally after redemption expires and/or quiet title; case-by-case. needs_verification.
  • Common defects: defective/!diligent notice; pending redemption; surviving federal tax liens (federal-tax-lien-redemption); heirs-property interests; bankruptcy stay at time of sale.

8. Case Law (real, verified)

CaseYearTopicHolding (plain English)Source
hamilton-county-v-2018-delinquent-taxpayers2024surplusA judgment lienholder that held a valid lien at the time of the tax sale keeps priority to excess proceeds under § 67-5-2702(c)(2) even if its lien later lapsed; the more-specific tax-sale statute controls over the general judgment-lien-duration statute (§ 25-5-105). Surplus waterfall ends at the former owner/heirs (§ 67-5-2702(c)(4)).https://www.tncourts.gov/sites/default/files/OpinionsPDFVersion/Hamilton%20County%20and%20FUB%20of%20the%20State%20of%20TN%20Et%20Al.%20v.%20Tax%20Year%202018%20Delinquent%20Taxpayers%20Et%20Al.%20Opinion.pdf
andrews-v-fifth-third-bank2007surplusIn a foreclosure surplus dispute, a judgment lien “survives for ten years from entry of final judgment” and a senior recorded judgment lien “attached to the excess proceeds … entitled her to payment in full before any payments to creditors of lesser priority” — “first in time, first in right.” (Quoted/distinguished in Hamilton County, 228 S.W.3d 102, 112–113.)https://www.tncourts.gov/sites/default/files/OpinionsPDFVersion/Hamilton%20County%20and%20FUB%20of%20the%20State%20of%20TN%20Et%20Al.%20v.%20Tax%20Year%202018%20Delinquent%20Taxpayers%20Et%20Al.%20Opinion.pdf
maccaughelty-v-sherrod2023due_process / sale_procedureThe county need only search the four offices named in § 67-5-2502(c)(2); it is not required to search utility or other records, so service by publication after that diligent search was effective on the delinquent taxpayer. (No. M2020-00403-COA-R3-CV.)https://www.ctas.tennessee.edu/eli/tax-sale
tyler-v-hennepin-county2023surplus / due_process(U.S. Supreme Court, 598 U.S. 631) Retaining surplus equity beyond the tax debt is an unconstitutional taking. Tennessee already complies because § 67-5-2702 returns surplus to owners/junior interests.https://www.law.cornell.edu/supct/cert/22-166
city-of-chattanooga-v-2011-delinquent-taxpayers2017redemption”The source of the funds, the owner of the checking account, or the identity of the person who delivered the payment … makes no legal difference” — anyone may fund a redemption; no statutory restriction on source of redemption funds. (No. E2016-00025-COA-R3-CV, 2017 WL 541535.)https://www.ctas.tennessee.edu/eli/redemption
rutherford-county-v-delinquent-taxpayers2017redemption / sale_procedureA tax-sale purchaser’s duty is only to keep the property “wind tight and air tight” to prevent waste; upgrades (new carpet, drywall, fixtures, mailbox) are non-reimbursable improvements, not “lawful charges” chargeable to a redeemer. (No. M2016-01254-COA-R3-CV, 2017 WL 5495401.)https://www.ctas.tennessee.edu/eli/redemption

All six cases above were located through Tennessee government primary materials (tncourts.gov opinion PDF; CTAS/UT County Technical Assistance Service, an official state body) and/or the U.S. Supreme Court reporter. The Hamilton County opinion was retrieved in full and quotes § 67-5-2702 verbatim. For MacCaughelty, Chattanooga, and Rutherford County, the docket numbers and holdings as summarized by the official CTAS/tncourts delinquent-tax materials are recorded; the full underlying opinions were not individually retrieved (see needs_verification).

9. Edge Cases (state-specific notes)

  • bankruptcy-automatic-stay — a tax sale conducted in violation of the automatic stay is void/voidable; § 25-5-105 tolling in bankruptcy noted in Hamilton County (citing Weaver v. Hamrick, 907 S.W.2d 385 (Tenn. 1995)). needs_verification: exact TN bankruptcy-stay tax-sale holding.
  • federal-tax-lien-redemption — the IRS retains a 120-day federal right of redemption after a sale that discharges a junior federal tax lien (26 U.S.C. § 7425); applies on top of Tennessee’s process.
  • heirs-property — heirs who acquire by will or intestate succession from a defendant-taxpayer may both redeem (§ 67-5-2701) and claim excess proceeds (§ 67-5-2702(c)(4)); recording an affidavit of heirship ≥ 30 days pre-hearing is required to preserve notice/standing for excess proceeds.
  • redemption-right-as-transferable-interest — Tennessee treats the redemption right as an estate or interest in land, hence transferable/assignable (per CTAS materials citing State v. Delinquent Taxpayers, 2003 WL 21171858).
  • possession-during-redemption — possession and risk of loss transfer to the purchaser on the confirmation order; the purchaser may obtain a writ of possession; redemption restores the owner (§ 67-5-2503; Wright v. Williams, 75 Tenn. 700 (1881)). needs_verification: full Wright text.
  • HOA dues are an enumerated lawful charge recoverable from a redeemer (§ 67-5-2701(e)).

10. Operations

  • Where records live: county chancery court (clerk & master) for tax-sale files, motions to redeem, and excess-proceeds motions; register of deeds for deeds/liens/ affidavits of heirship; county trustee for delinquency status; assessor for the owner’s address of record.
  • Public access / portals:
  • Typical costs: redemption = full taxes/penalty/interest/costs + 12%/yr on purchase price + any proven lawful charges; excess-proceeds claim = motion filing (no percentage cap on private finder fees located).
  • Typical timelines: suit by Apr. 1 → sale → confirmation order → redemption (30/90/180 days or 1 yr by delinquency) → excess-proceeds motions until escheat (abandonment presumed no earlier than 1 yr after redemption expires).
  • Key agencies: County Chancery Court / Clerk & Master; County Trustee; Register of Deeds; Assessor of Property; Tennessee Dept. of Treasury Unclaimed Property.
  • Useful forms: Motion to Claim Excess Sale Proceeds (county clerk & master forms, e.g., Knox County link above); Motion to Redeem; Affidavit of Heirship.

11. Meta

Graph View

Backlinks