A deed of trust is a legal document providing security to the lender for a mortgage loan. If it meets legal requirements for validity, the deed of trust has no automatic expiration. It will be valid until either the borrower repays the loan the trust deed is security for or if the property is sold in a foreclosure action.
Deed of Trust
Tennessee law permits the use of deeds of trusts to secure mortgage loans. This legal document puts the equitable title of the property in the possession of a trustee, who is appointed by the lender. The document and the trustee status become invalid upon the borrower repaying the mortgage loan. However, the deed of trust creates a power of sale of the property for the trustee if the borrower defaults on the mortgage loan. This power of sale allows the trustee to forcibly seize and sell the property upon default without having to go to court.
Trust Deed Release
Although the deed of trust technically becomes void upon the repayment of the mortgage loan, Tennessee state law requires the lender or trustee to formally release the trust deed from the property. This is because trust deeds are recorded and create a lien on the property. The law assures that the owner who has repaid the mortgage will have it on public record that the property is free of that mortgage obligation.
Power of Sale
The power of sale held by the trustee is very significant and advantageous for the lender, therefore, Tennessee state law has requirements that are imposed on the trustee to be able to use it. The most important requirement is of giving notice. The borrower must receive, in person or by certified mail, notice of the intent to sell the property at least 30 days before the trustee publicly advertises the forced sale. A public notice of the forced sale must be published at least three separate times, starting at least 20 days before the sale date. All of the stipulations contained in the power of sale clauses in the trust deed must be followed by the trustee.
Release Requirements
Upon the repayment of the mortgage loan, Tennessee state law requires a formal release of the deed of trust to be recorded in the same county office where the trust deed is recorded. This can be done by either the trustee or the mortgage lender. Any costs incurred for this are the responsibility of the lender. The lender will be liable for a $100 penalty to the borrower if the release is not recorded within 45 days of the borrower's written request for one. If a second written request is made after these 45 days, the lender will be liable for a $1,000 penalty after 30 days of noncompliance. A noncompliant lender will also be responsible for any resulting attorney or court costs.
