State Guide
Tennessee Excess Proceeds Guide
Educational overview of surplus funds, excess proceeds, and related claim processes in Tennessee.
What Excess Proceeds May Be Called In Tennessee
Tennessee's tax sale statute, TCA section 67-5-2507, uses the term "excess funds" or "surplus" to describe the amount remaining after a tax-delinquent property is sold at a delinquent tax sale and the tax lien, interest, penalties, and costs are satisfied. These funds are deposited with the clerk and master of the chancery court in the county where the property is located. Practitioners also refer to these as "delinquent tax sale surplus," "chancery court surplus," and "tax sale overage." For mortgage foreclosures in Tennessee — which can proceed either through non-judicial trustee sales or judicial foreclosures — surplus is referred to as "trustee sale surplus" or "foreclosure surplus." Tennessee's use of the chancery court clerk and master as the depository for tax sale surplus is distinct from the circuit court system used in some states.
Common Sale Types In Tennessee
Tennessee generates surplus through several mechanisms. The delinquent tax sale is conducted by the county after property taxes go unpaid. The county trustee or delinquent tax attorney files a lawsuit in chancery court to enforce the tax lien, and the court orders a sale. The clerk and master conducts the public auction at the courthouse steps, and any bid above the tax delinquency and costs becomes excess funds held by the clerk and master. The second major source is non-judicial trustee foreclosures under deeds of trust — Tennessee's dominant mortgage instrument. The substitute trustee conducts a public auction and surplus results when the winning bid exceeds the secured debt. Judicial mortgage foreclosures are also possible but less common. Mechanic's and materialman's lien enforcement sales under TCA Title 66, Chapter 11, and HOA lien foreclosures under the Tennessee Condominium Act are additional sources.
Who May Need To File
For tax sale surplus held by the clerk and master, the former owner of record at the time of the tax sale is the primary entitled party. The clerk and master holds the excess funds until a motion for distribution is filed and a court order is entered. Lienholders with recorded interests — mortgage holders, judgment creditors, and mechanic's lien claimants — may file claims in order of priority. Heirs of deceased owners must establish their right through probate proceedings in the county where the decedent resided. Surviving spouses with tenancy by the entirety interests may have a claim distinct from the deceased spouse's estate. The chancery court retains jurisdiction over the surplus and will determine competing claims. Tennessee does not have a specific statutory time limit for claiming tax sale surplus in all cases, but the doctrine of laches applies, and claimants should file promptly. For trustee sale surplus, the substitute trustee distributes surplus to the former borrower and junior lienholders according to the deed of trust and applicable law.
Why County Rules Matter
Tennessee has 95 counties, each with its own chancery court (or combined chancery/circuit court in some counties) and clerk and master. Shelby County (Memphis), Davidson County (Nashville), and Knox County (Knoxville) are the major metropolitan counties with the highest tax sale and foreclosure volumes. Hamilton County (Chattanooga), Williamson County, and Rutherford County (Murfreesboro) also have active dockets. Each clerk and master administers surplus funds independently, and county-level variations include: the specific motion practice in that chancery court; the clerk and master's reporting requirements for surplus on deposit; whether the clerk publishes a list of unclaimed surplus; the procedures for publication notice when claimants are unknown; and whether the county has a separate delinquent tax attorney who handles the filing and prosecution of tax sale cases. The Tennessee Department of Treasury Unclaimed Property Division may receive surplus that has remained unclaimed at the county level for the statutory dormancy period.
Documents Commonly Needed
Tennessee surplus claims generally require: (1) a motion for distribution of excess funds filed in the chancery court under the tax sale docket number; (2) the clerk and master's deed or order confirming sale showing the sale date and price; (3) the clerk and master's report of surplus or statement of funds on deposit; (4) a title search or chain of title report from a Tennessee title company or attorney showing ownership at the time of sale and all recorded liens; (5) certified copies of recorded deeds from the county register's office; (6) government-issued photo identification; (7) if the former owner is deceased, Letters Testamentary or Letters of Administration from the Tennessee probate court; (8) a proposed order for the chancellor's signature; and (9) a completed IRS Form W-9. Service of the motion on all interested parties is required.
Disclaimer: National Excess Proceeds Exchange is not a law firm, does not provide legal advice, and is not a government agency. Information provided on this website is educational only. Recovery of excess proceeds is not guaranteed. Eligibility, documentation, deadlines, and procedures vary by state, county, agency, court, and case facts. Visitors should consult qualified legal counsel when legal advice is needed.