Because Tennessee is primarily a “title” theory state, the most widely used instrument of security for buying property is the trust deed. This document is very similar in nature to a mortgage lien, however it generally includes a power of sale clause and the property is held in trust until such time as the underlying loan has been paid in full. Only when the loan has been completely repaid is the title deed transferred into ownership of the borrower.
Essentially this gives the trustee of the property the rights to sell it through a non-judicial foreclosure process if the borrower defaults on their loan. Bear in mind that the borrower has to be a couple of months in default before this action takes place, but this is the only means by which the lender is able to recover the debt owed to them.
Non-judicial foreclosures in Tennessee generally take about 90 – 120 days to finalize if they are uncontested. The borrower has the right to contest the foreclosure and this is able to delay proceedings. If the borrower is really in trouble and decides to file for bankruptcy, this also delays the action of the foreclosure, as this is a completely different matter.
Much as the borrower has the right to contest a foreclosure, they also have the right to redemption. This dictates that the property may be recovered by the home owner after the foreclosure has taken place, if they are able to cure their debt to the lender, and they have 2 years in order to do this, unless this right has been waived in the original loan agreement.
Lenders are also entitled to pursue a deficiency judgment in Tennessee, and this is in the instance that the sale of the property does not cover the total outstanding debt owed.