Tennessee HOA Foreclosure

Overview

Tennessee relies on a non-judicial process for most HOA foreclosures. When an association needs to enforce an assessment lien, it typically does so through a trustee's sale under a power of sale — governed by a UCIOA-derived 2008 Condominium Act and anchored by a two-year statutory right of redemption that most deeds of trust waive from the start.¹ Two separate statutes govern condominiums depending on when they were created. The Tennessee Condominium Act of 2008, Tenn. Code § 66-27-201 et seq., covers condominiums created on or after January 1, 2009. The older Horizontal Property Act, Tenn. Code § 66-27-101 et seq., continues to govern condominiums created before that date.² Tennessee has no comprehensive planned-community statute, so non-condominium homeowners associations operate under recorded covenants, conditions, and restrictions, the Tennessee Nonprofit Corporation Act, and common-law contract and property principles.³ A trustee's sale runs through published newspaper advertisement, online posting, written notice to the debtor and interested parties, and a public auction conducted under Tenn. Code § 35-5-101 et seq.⁴ Federal law overlays the entire process — including the Fair Debt Collection Practices Act as limited by Obduskey v. McCarthy & Holthus LLP, the Servicemembers Civil Relief Act, and the bankruptcy automatic stay.⁵ The sections that follow lay out the statutory framework, the procedural sequence, recent legislative and judicial activity, and Tennessee's national positioning.

The statutory framework

The Tennessee Condominium Act of 2008 and the Horizontal Property Act

Tennessee divides condominium governance by creation date. The Tennessee Condominium Act of 2008, Tenn. Code § 66-27-201 et seq., is the short title for Parts 2 through 5 of Chapter 27 and was enacted by Acts 2008, ch. 766.⁶ It derives from the Uniform Common Interest Ownership Act and governs condominiums created on or after January 1, 2009. Certain provisions reach condominiums created earlier, but only as to events and circumstances occurring after that date, and they do not generally invalidate existing master deeds, declarations, bylaws, or plats.⁷ The Horizontal Property Act, Tenn. Code § 66-27-101 et seq., comprising Part 1 of the same chapter, continues to govern condominiums created before January 1, 2009.²

For post-2008 condominiums, Tenn. Code § 66-27-415 establishes the association's lien on a unit for any assessment levied against the unit or fine imposed against the owner, effective from the time the assessment or fine becomes due. The association can foreclose the lien through judicial action. The declaration may also allow foreclosure in the manner of a deed of trust with power of sale under Title 35, Chapter 5. The lien secures unpaid assessments and, unless the declaration provides otherwise, also fees, late charges, fines, and interest.⁸ For pre-2008 condominiums, the lien arises under the Horizontal Property Act, where unpaid pro rata common expenses become a lien against the apartment under Tenn. Code § 66-27-116, referencing the assessment obligation in § 66-27-114.⁹

On super-priority, the statutory text demands precise reading. Section 66-27-415 grants the association a priority in foreclosure sale proceeds for up to six months of common expense assessments preceding the enforcement action, but not exceeding one percent of the maximum principal indebtedness secured by the first mortgage or deed of trust. This is a payment priority — not a lien-priority that wipes out senior encumbrances. The statute expressly provides that any association foreclosure remains subject to any prior mortgage or deed of trust and does not extinguish it. The priority is also non-transferable and is extinguished if assigned to a third party.⁸ Pre-2008 condominiums under the Horizontal Property Act and planned communities under recorded covenants do not carry this UCIOA-style payment priority.

For planned communities, Tennessee has no comprehensive planned-community statute. Non-condominium associations draw their lien and foreclosure authority from their recorded covenants, conditions, and restrictions, supplemented by the Tennessee Nonprofit Corporation Act, Tenn. Code § 48-51-101 et seq., under which most associations are incorporated, and by common-law contract principles. No Tennessee statute creates an automatic assessment lien for single-family homeowners associations.³

Non-judicial trustee's sale

Tenn. Code § 35-5-101 et seq. sets the mechanics of a Tennessee trustee's sale. As amended effective July 1, 2025, § 35-5-101 requires the foreclosure sale to be advertised at least two times in a newspaper published in the county where the sale occurs, with the first publication at least twenty days before the sale. The notice must also post online through a registered third-party internet posting company for at least twenty continuous days. Before this amendment, the statute required three newspaper publications.^4,10

The trustee or other foreclosing party must send the debtor and any co-debtor a copy of the notice required by Tenn. Code § 35-5-104 on or before the first publication date, by registered or certified mail, return receipt requested. Section 35-5-104 specifies the contents of the advertisement, including identification of the parties, a legal description of the property, the time and place of sale, and the website of the third-party internet posting company.¹¹ Tennessee courts treat strict compliance with these provisions as essential to a valid sale.

At the sale, the property goes to the highest bidder at public auction. The trustee may attend in person or by agent and execute the trustee's deed. The foreclosing lender commonly enters a credit bid up to the amount owed. Tennessee is a two-track state — the foreclosing party must satisfy both the statute and the specific terms of the lien instrument, so a deed of trust requiring more than the statutory minimum still controls.¹⁰ Judicial foreclosure is available but uncommon for residential property; for association liens, § 66-27-415 permits judicial foreclosure and, where the declaration grants a power of sale, the faster trustee's-sale route.⁸

Redemption, court structure, and federal overlays

Tennessee provides a two-year statutory right of redemption after a foreclosure sale under Tenn. Code § 66-8-101. That same statute allows the right to be expressly waived in the deed of trust or mortgage, and a waiver of the equity of redemption or words of similar import suffices. Section 66-8-103 reinforces that the right does not extend to sales under a power in which the right has been waived.¹² Standard Tennessee deeds of trust, including the uniform Fannie Mae and Freddie Mac instruments, routinely include such a waiver, so in most cases there is no post-sale redemption in practice.¹³ For post-2008 condominium liens, § 66-27-415 separately provides that the association's lien is not subject to the statutory or other right of redemption unless specifically reserved in the declaration.⁸

Trial-level disputes proceed through Tennessee Chancery Courts — courts of equity — and the Circuit Courts, courts of general jurisdiction that share overlapping jurisdiction over many civil matters. Civil appeals, including HOA and foreclosure disputes, go to the Tennessee Court of Appeals, an intermediate court of twelve judges sitting in panels of three that meet monthly in Jackson, Knoxville, and Nashville, with discretionary review by the Tennessee Supreme Court. The separate Court of Criminal Appeals hears only criminal matters and is not the route for HOA foreclosure appeals.¹⁴

Federal law overlays the state process throughout. The Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., governs pre-foreclosure dunning by third-party collectors. In Obduskey v. McCarthy & Holthus LLP, decided March 20, 2019, the Supreme Court held unanimously that "a business engaged in no more than nonjudicial foreclosure proceedings is not a 'debt collector' under the FDCPA, except for the limited purpose of § 1692f(6)," a safe harbor that reaches Tennessee's trustee's sale; broader FDCPA duties can still attach where an entity does more than enforce the security interest.¹⁵ The Servicemembers Civil Relief Act, 50 U.S.C. § 3901 et seq., provides stays and protections for active-duty servicemembers, and Tennessee law adds a state-level protection for certain reserve and National Guard members.¹⁶ The bankruptcy automatic stay under 11 U.S.C. § 362 halts foreclosure activity upon an owner's bankruptcy filing.

The Tennessee HOA foreclosure procedural sequence

Lien establishment and recording

For post-2008 condominiums, the association's lien under Tenn. Code § 66-27-415 arises automatically from the time an assessment or fine becomes due, without requiring a separate recording to attach. Recording of the declaration constitutes record notice of the lien, and a lien up to the six-month, one-percent payment priority is perfected without recording; any delinquent amount above that priority is perfected by recording in the register of deeds office in the county where the property lies and takes priority over subsequently filed liens. A condominium lien is extinguished unless enforcement proceedings begin within six years after the lien becomes effective.⁸ For pre-2008 condominiums, the lien arises under the Horizontal Property Act at § 66-27-116.⁹ For planned communities, lien attachment, recording, and priority are governed entirely by the recorded covenants, since no statute supplies these terms. The six-month, one-percent payment priority applies only to post-2008 condominiums and is subject to — and does not extinguish — a prior first mortgage or deed of trust.

Pre-foreclosure notice and demand

Where a post-2008 condominium association forecloses non-judicially under a power of sale in its declaration, § 66-27-415 requires the association to give notice of its action to the unit owner and to all lienholders of record before the first publication of the trustee's-sale notice. Notice by United States mail is deemed sufficient and deemed received three days after deposit. This statutory notice operates alongside, and in addition to, the trustee's-sale notice obligations in Title 35, Chapter 5.⁸ For planned communities, pre-foreclosure notice and any cure or demand requirements are set by the recorded covenants rather than by statute, so the declaration's text controls. Tennessee does not provide a general statutory right to reinstate before sale except for high-cost home loans under Tenn. Code § 45-20-104, though deeds of trust and declarations frequently grant a contractual cure right.¹⁷

Trustee's sale procedure

The trustee's sale follows Tenn. Code § 35-5-101 et seq. for all foreclosing parties, including associations that proceed by power of sale. The sale must be advertised at least two times in a newspaper in the county where the sale will occur, with the first publication at least twenty days before the sale, and posted online through a registered third-party internet posting company for at least twenty continuous days under § 35-5-101 as amended in 2025.⁴ The trustee or selling party must mail the debtor and any co-debtor the § 35-5-104 notice on or before the first publication date by registered or certified mail, return receipt requested. The published notice must contain the contents specified in § 35-5-104, including the parties, a legal description, the time and place of sale, and the third-party posting website. Interested parties — defined to include record holders of liens that will be extinguished or adversely affected and recorded more than ten days before the first notice — must be listed.¹¹ A sale may be postponed and rescheduled within one year without new newspaper publication if announced at the scheduled time and place, with mailed notice at least ten days before the new date if the postponement exceeds thirty days.⁴ The sale is a public auction; the trustee may attend by agent, receive bids, and execute the trustee's deed. Where the declaration imposes requirements beyond the statute, the foreclosing association must satisfy both. These mechanics apply equally to post-2008 condominium power-of-sale foreclosures and to planned-community foreclosures authorized by recorded covenants; pre-2008 condominium foreclosures likewise use the Title 35 process where a power of sale exists.

Post-sale rights and redemption

After the sale, the two-year statutory right of redemption under Tenn. Code § 66-8-101 applies in theory, but it is routinely waived in the deed of trust and, for post-2008 condominium liens, is excluded by § 66-27-415 unless reserved in the declaration, so post-sale redemption is rare in practice.¹² If a third-party bidder pays more than the amounts owed, the surplus is distributed to junior lienholders by priority and then to the former owner. An association foreclosure does not extinguish a senior first mortgage or deed of trust, which survives the sale. A purchaser takes title subject to senior encumbrances and may pursue post-sale eviction of the former owner or occupants through the courts. Under Tenn. Code § 35-5-117, the foreclosing party may seek a deficiency judgment in a separate action after the sale, but the deficiency may be limited to the difference between the debt and the property's fair market value if the borrower shows the sale price was materially less than that value.¹⁸

Recent legislative and judicial activity

Recent bills

Tennessee's most significant recent change to its foreclosure process is a direct response to the mounting cost and complexity of print-only notice requirements. The legislature moved the state to a hybrid model — cutting required newspaper runs while adding a mandatory online posting component.

Recent appellate rulings

Two rulings from Tennessee's appellate courts are reshaping how practitioners approach foreclosure challenges and how associations treat their declaration-based duties.

Active legislative debates

Legislative debate has centered on modernizing foreclosure notice, reflected in the 2025 shift from print-only to hybrid print-and-online publication. The Tennessee Bankers Association led the multi-session reform effort, citing newspaper charges of roughly $450 to $1,100 per notice against about 5,000 foreclosure notices filed annually, and built the compliant posting site at $100 per notice and $50 per continuance; newspaper interests countered with concerns over rural internet access and oversight of third-party sites.²¹ Proposals for broader statutory regulation of homeowners associations have been introduced in prior sessions without enactment, leaving Tennessee without a comprehensive HOA statute.

National positioning

Tennessee sits in the middle of the national spectrum. It is a predominantly non-judicial trustee's-sale state with a UCIOA-derived 2008 Condominium Act that grants associations a limited six-month, one-percent payment priority in foreclosure proceeds rather than a lien-priority super-lien that wipes out first mortgages, and it pairs a two-year statutory redemption with a routinely enforceable waiver that eliminates redemption in most cases. This contrasts with UCIOA super-priority states where the association lien can extinguish a first mortgage, with strict judicial-foreclosure states where every sale runs through court, and with pure trustee-sale states that provide no redemption period at all. For multi-state operators, the practical implication is clear: Tennessee combines a fast, contract-driven trustee's sale with a payment priority that recovers only a capped slice of arrears, so collection strategy should not assume a senior, mortgage-extinguishing lien.

Tennessee imposes no dedicated HOA regulator and does not require community association managers to be licensed, while real estate brokerage falls under the Tennessee Real Estate Commission. Boards, managers, and counsel should track quarterly statutory and appellate developments, since notice mechanics and foreclosure doctrine continue to evolve.

Footnotes

1. Tenn. Code Ann. § 66-27-201, Tennessee Condominium Act of 2008, Short title; Tenn. Code Ann. § 66-8-101, Right of Redemption and Waiver ↩
2. Tenn. Code Ann. § 66-27-101 et seq., Horizontal Property Act; § 66-27-202, Applicability to pre-2009 condominiums ↩
3. Tenn. Code Ann. § 48-51-101, Tennessee Nonprofit Corporation Act ↩
4. Tenn. Code Ann. § 35-5-101, Publication and notice of trustee's sale ↩
5. Obduskey v. McCarthy & Holthus LLP, 586 U.S. 466 (2019) ↩
6. Tennessee, Public Chapter No. 766 (SB 2935/2008), Enacting the Tennessee Condominium Act of 2008 ↩
7. Tenn. Code Ann. § 66-27-202, Applicability of Act to condominiums created before January 1, 2009 ↩
8. Tenn. Code Ann. § 66-27-415, Lien for assessments; six-month/one-percent payment priority; subordination to prior mortgage; redemption exclusion; six-year limitation ↩
9. Tenn. Code Ann. § 66-27-116, Prorated expenses and lien; § 66-27-114, Horizontal Property Act assessments ↩
10. Tennessee, Public Chapter 515 (HB 1127/SB 0727, 114th General Assembly), Tennessee Foreclosure Modernization Act; signed May 21, 2025; effective July 1, 2025 ↩
11. Tenn. Code Ann. § 35-5-104, Contents of advertisement or notice; interested parties ↩
12. Tenn. Code Ann. § 66-8-101, Right of redemption and waiver; § 66-8-103, Waiver in mortgage or trust deed ↩
13. Tenn. Code Ann. § 66-8-103, Express waiver in standard deeds of trust ↩
14. Tennessee Administrative Office of the Courts, Court of Appeals; Tenn. Code Ann. § 16-4-102 ↩
15. Obduskey v. McCarthy & Holthus LLP, 586 U.S. 466 (2019) (decided Mar. 20, 2019; unanimous opinion by Breyer, J.) ↩
16. Servicemembers Civil Relief Act, 50 U.S.C. § 3901 et seq.; Tenn. Code Ann. § 26-1-111 ↩
17. Tenn. Code Ann. § 45-20-104, Right to cure high-cost home loans ↩
18. Tenn. Code Ann. § 35-5-117, Deficiency judgment ↩
19. Case v. Wilmington Trust, N.A., 703 S.W.3d 274 (Tenn. 2024), No. E2021-00378-SC-R11-CV (Tenn. Nov. 14, 2024) ↩
20. Renegade Mountain Community Club, Inc. v. Cumberland Point Condominium Property Owners Ass'n, Inc., No. E2024-00213-COA-R3-CV (Tenn. Ct. App. May 2, 2025) ↩
21. Tennessee Bankers Association, A Modern Solution for Foreclosure Notices — Why ForeclosureTennessee.com Matters to Your Bank ↩