Tax Foreclosure in Tennessee: What Homeowners Need to Know
A guide from AuctionBlock.org
If you own a home in Tennessee and have fallen behind on property taxes, you should know that Tennessee uses a tax lien sale system. Your unpaid taxes can be sold to a third-party investor, and if you do not redeem the property within the statutory period, you can lose your home. This guide explains the full process, your redemption rights, real exemption programs, and where to find help.
How Property Tax Collection Works in Tennessee
Property taxes in Tennessee are collected by the county trustee. Tax bills are typically mailed in the fall, and taxes are due by February 28 of the following year. If taxes are not paid by the due date, they become delinquent and begin accruing interest and penalties.
Tennessee's property tax sale laws are primarily found in Tennessee Code Annotated (T.C.A.) Title 67, Chapter 5, Parts 24 through 29.
The Tax Lien Sale Process
Tennessee counties conduct annual tax sales to sell delinquent property tax liens. The process works as follows:
1. Delinquency and Notice After February 28, unpaid taxes become delinquent. The county trustee adds interest at a rate of 1.5% per month (18% per year) on the delinquent amount (T.C.A. Section 67-5-2010). Before the tax sale, the county clerk must publish a notice in a newspaper of general circulation for four consecutive weeks, listing all properties to be sold (T.C.A. Section 67-5-2501).
2. The Tax Sale Tennessee counties hold tax sales, typically in the spring or summer. At the sale, the delinquent tax lien is auctioned. The minimum bid is the total amount of delinquent taxes, interest, penalties, court costs, and fees. Bidders compete, and the winning bidder pays the total amount due. The county clerk issues a tax sale certificate to the purchaser.
In Tennessee, tax sales are conducted as chancery court proceedings. The county files a lawsuit (a "bill in chancery") against the delinquent property owners (T.C.A. Section 67-5-2415).
3. What the Buyer Receives The purchaser at a Tennessee tax sale receives a certificate of purchase, not immediate ownership. The homeowner retains the right to redeem during the statutory redemption period.
The Redemption Period
Tennessee provides a one-year redemption period for most properties.
Standard Redemption Period: One Year Under T.C.A. Section 67-5-2701, the property owner has one year from the date of the tax sale to redeem the property. To redeem, the owner must pay the purchaser the amount paid at the tax sale, plus 10% interest per year, plus any additional taxes paid by the purchaser during the redemption period.
Redemption by Other Interested Parties Under T.C.A. Section 67-5-2702, lienholders, mortgagees, and other parties with a legal interest in the property also have the right to redeem during the one-year period.
After the Redemption Period If no one redeems within one year, the purchaser may petition the court for a tax deed, which transfers full title to the property. Once the deed is issued, the former owner's rights are extinguished.
Exemption and Assistance Programs
Tennessee has several property tax relief programs that may help you avoid or reduce delinquency.
Tax Relief for Elderly Homeowners Under T.C.A. Section 67-5-702, homeowners age 65 or older may qualify for property tax relief on their primary residence. The program reimburses a portion of property taxes paid, up to a maximum set annually by the state (the reimbursement cap for 2024 was on the first $27,000 of full market value). Income limits apply. You must apply through your county trustee's office.
Tax Relief for Disabled Homeowners Under T.C.A. Section 67-5-702, homeowners who are totally and permanently disabled (as determined by the Social Security Administration, the Department of Veterans Affairs, or a licensed physician) may also qualify for the same property tax relief program as elderly homeowners, regardless of age. The same income limits and reimbursement caps apply.
Disabled Veteran Property Tax Exemption Under T.C.A. Section 67-5-704, veterans with a 100% permanent and total service-connected disability, or their surviving spouses, are eligible for property tax relief on their primary residence. This is a full exemption on the first $175,000 of property value.
Tax Freeze for Seniors Several Tennessee counties offer a property tax freeze for homeowners age 65 and older. The freeze locks your tax bill at its current amount, preventing future increases even if your assessment rises. This is authorized by Article II, Section 28 of the Tennessee Constitution and implemented at the county level. Check with your county trustee to see if your county participates.
Greenbelt Program (Agricultural Land) Under T.C.A. Section 67-5-1004, owners of agricultural, forest, or open space land may qualify for reduced assessment under the Agricultural, Forest, and Open Space Land Act. This is not directly a foreclosure prevention tool but can significantly lower tax bills for qualifying properties.
Legal Aid and Assistance Organizations
If you are facing a tax sale in Tennessee, these organizations can help:
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Legal Aid Society of Middle Tennessee and the Cumberlands -- Free legal help for low-income residents in 48 Middle Tennessee counties. Phone: 1-800-238-1443. Website: las.org
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Memphis Area Legal Services (MALS) -- Free civil legal assistance for low-income residents in Shelby County and West Tennessee. Phone: 901-523-8822. Website: malsi.org
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Legal Aid of East Tennessee -- Serves low-income residents in 26 East Tennessee counties. Phone: 865-637-0484. Website: laet.org
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Tennessee Alliance for Legal Services (TALS) -- Statewide coordinator for civil legal aid. Website: tals.org. Can help you find the legal aid office serving your county.
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Tennessee Bar Association Lawyer Referral Service -- Can connect you with an attorney for a reduced-fee initial consultation. Website: tba.org
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Tennessee Housing Development Agency (THDA) -- Administers homeowner assistance programs and maintains a list of HUD-approved housing counselors. Website: thda.org
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HUD-Approved Housing Counseling Agencies -- Find counselors at hud.gov/findacounselor.
Emergency Action Steps
If your property taxes are delinquent or you have received notice of a tax sale in Tennessee, act now:
1. Contact your county trustee immediately. Find out the total amount owed, including interest and penalties. Ask about payment options.
2. Apply for tax relief. If you are 65 or older, disabled, or a disabled veteran, apply for the property tax relief or exemption programs described above. These programs can reduce your current and future tax bills.
3. Contact legal aid. Call the legal aid organization serving your area. They can explain your rights and may be able to represent you in the tax sale proceedings.
4. If a tax sale has already occurred, know your one-year deadline. You have exactly one year from the date of the sale to redeem. Calculate the redemption amount and begin working toward payment immediately.
5. Contact a HUD-approved housing counselor. A counselor can help you create a plan and identify additional resources.
6. Visit auctionblock.org/get-help. AuctionBlock.org is a mission-driven company dedicated to foreclosure prevention. We can help you navigate the process and connect you with resources in your area.
Key Statutory References
- T.C.A. Section 67-5-2010 -- Interest on delinquent taxes
- T.C.A. Section 67-5-2415 -- Tax sale court proceedings
- T.C.A. Section 67-5-2501 -- Notice requirements
- T.C.A. Section 67-5-2701 -- One-year right of redemption
- T.C.A. Section 67-5-2702 -- Redemption by interested parties
- T.C.A. Section 67-5-702 -- Tax relief for elderly and disabled
- T.C.A. Section 67-5-704 -- Disabled veteran property tax relief
Legal Disclaimer
This guide is provided by AuctionBlock.org for educational purposes only. It does not constitute legal advice. Tax laws and local procedures vary by county and change over time. You should consult with a licensed attorney in Tennessee for advice specific to your situation. AuctionBlock.org is a mission-driven company organization. We are not a law firm and do not provide legal representation. AuctionBlock.org is a newly established organization and has not yet served any families.
For help with tax foreclosure prevention, visit auctionblock.org/get-help.