A deficiency judgment is typically in an amount equal to the difference between the funds received from a court sale of property and the balance remaining on a debt. Deficiency judgments are commonly issued when a property owner fails to pay amounts owed on a mortgage and the property securing the mortgage is sold to satisfy the debt, but the proceeds from the sale are less than the amount owed.
Deficiency judgments are not allowed in all states. In order to get a deficiency judgment in most states, the party owed money must file a suit for judicial foreclosure instead of just foreclosing on real property. However, some states allow a lawsuit for a deficiency after foreclosure on the mortgage or deed of trust. Local laws should be consulted for specific requirements in your area.
A Tennessee Complaint or Petition to Recover Deficiency after Sale under Trust Deed or Deed of Trust is a legal document filed by a lender or their assigned representative seeking to collect the remaining debt balance from a borrower after a property has been sold in a foreclosure sale and the proceeds were insufficient to cover the total amount owed. In the state of Tennessee, there are two main types of complaints or petitions that can be filed in this scenario: a General Complaint or Petition to Recover Deficiency and a Special Complaint or Petition to Recover Deficiency. The General Complaint or Petition to Recover Deficiency can be filed when the lender or their representative intends to pursue a lawsuit against the borrower seeking recovery of the remaining debt balance. This type of complaint is generally used in cases where there is no statutory limitation on the pursuit of the deficiency balance. The lender must provide evidence to substantiate the validity of the remaining debt and prove that the foreclosure sale proceeds were not sufficient to cover the outstanding balance. Additionally, the lender must demonstrate that the borrowed funds were used to purchase or improve the property in question. On the other hand, the Special Complaint or Petition to Recover Deficiency is filed when the lender wants to pursue a lawsuit against the borrower to collect the remaining debt balance, but the foreclosure sale occurred more than six years prior to filing the complaint. In Tennessee, there is a six-year statute of limitations for pursuing a deficiency balance after a foreclosure sale. This type of complaint is used when the statutory limitation period has passed, but the lender believes they have grounds to initiate legal action irrespective of the limitation. To ensure a successful Complaint or Petition to Recover Deficiency after Sale under Trust Deed or Deed of Trust, it is crucial to properly draft the complaint/petition, accurately articulate the loan agreement, outline the foreclosure proceedings, present the evidence supporting the deficiency claim, and demonstrate why legal action is warranted according to the relevant laws and regulations in Tennessee. This process often requires the expertise of an experienced attorney familiar with foreclosure and deficiency recovery laws in the state.
