At a Tennessee non-judicial foreclosure sale, the property sells for $310,000. The first deed of trust balance is $240,000, foreclosure costs are $8,000, and there is a second deed of trust with a balance of $45,000. In what order are the proceeds distributed?

Correct Answer

B) Foreclosure costs first, then first deed of trust, then second deed of trust, then any surplus to the borrower

In Tennessee, foreclosure sale proceeds are distributed in the following order: (1) costs and expenses of the foreclosure sale (trustee's fees, publication costs, attorney fees), (2) the debt secured by the foreclosing deed of trust (first lien), (3) junior lienholders in order of priority (second deed of trust), and (4) any remaining surplus to the borrower/trustor. In this scenario: $8,000 costs + $240,000 first DOT + $45,000 second DOT = $293,000 total, leaving a $17,000 surplus for the borrower.