A Tennessee borrower defaulted on a deed-of-trust loan and the trustee scheduled a non-judicial foreclosure sale. The borrower paid the full overdue amount, late fees, and costs three days before the scheduled sale date. Under Tennessee law, what is the effect of this payment?
Correct Answer
B) The borrower has exercised the equitable right of redemption, and the trustee must cancel the foreclosure sale
The equitable right of redemption (also called the right to cure or reinstate) allows a borrower to stop a foreclosure by paying all amounts due — including the overdue balance, fees, and costs — before the actual foreclosure sale takes place. This is distinct from the statutory right of redemption (which does not exist in Tennessee after a completed sale). By paying three days before the sale, the borrower has exercised the equitable right of redemption, which is recognized in Tennessee, and the trustee must cancel the scheduled sale.
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