Tennessee Surplus Funds: A Recovery Agent's Field Guide

Checked against the official state code and government office pages in October 2026.

A common mistake is thinking only former owners can request Tennessee tax-sale surplus. The court must first confirm the sale. Then any interested person may ask it to disburse excess proceeds under Tenn. Code Ann. § 67-5-2702. That's a useful starting point for agents. But it doesn't say when a helper may represent an owner.

Tennessee has power-of-sale and judicial foreclosure. In a deed-of-trust power-of-sale foreclosure, the trustee conducts the sale. The law also allows judicial foreclosure, but doesn't say who conducts that sale. See Section 4(b).

In one case, the lender asked to deposit surplus funds with the trial court so it could determine the competing interests. The Clerk and Master kept the funds pending disbursement. That's one example, not a rule about where all surplus funds are held. See the court opinion.

Tax-sale proceeds go through a court process after confirmation. The statute gives priority first to tax entities prosecuting the sale for any remaining or subsequent outstanding taxes that are a lien against the property. Second, it gives priority to any private or public lienholder with a claim against the property at the time of the tax sale, for the amount proven due under the lien and in accordance with priorities established by applicable law. See Tenn. Code Ann. § 67-5-2702.

Heirs may seek tax-sale excess proceeds. But a court decision gave priority to a creditor whose judgment lien was valid and enforceable at the time of sale. Check for claims and their priority before treating the former owner or heirs as the only possible recipients. See the court decision.

For mortgage surplus, one court case involved funds held by the Clerk and Master pending disbursement while competing claims were considered. The law doesn't spell out a full list of who can claim or how assignments work.

For tax-sale excess, an interested person may file a motion after the court confirms the sale. The statute gives no filing deadline in this provision. For mortgage surplus, the court opinion describes funds held pending disbursement, but gives no general claim window. Track confirmation dates and court notices. Then check the process with the office holding the funds.

Tennessee prohibits unlicensed practice of law and "law business." That includes giving legal advice for valuable consideration or acting as a representative for valuable consideration. A violation is a Class A misdemeanor. See Tenn. Code Ann. §§ 23-3-101, 23-3-103. Keep your role within the law. Ask a Tennessee attorney for guidance if your work may become legal representation.

Some agreements for property held by the treasurer have separate rules. See Tenn. Code Ann. § 66-29-176. For an agreement whose primary purpose is to locate, deliver, recover, or assist with recovery of property held by the treasurer, the agreement must be in a record that clearly sets forth the nature of the property and the services to be provided. It must be signed by or for the apparent owner. An agreement covered by that section is void and unenforceable if entered into within two years after the property was paid or delivered by the holder to the treasurer. The law doesn't confirm how it applies to surplus still held after a real-estate sale.

• Mortgage surplus holder: The law doesn't establish a general holder. Ask the court or office handling those funds.
• Tax-sale surplus holder: The law doesn't say where the proceeds are held. Ask the court handling the confirmed sale.
• Unclaimed proceeds: The law doesn't say where either kind of surplus goes if no one claims it. Ask the office holding the money.
• Helper claims and fees: The law doesn't settle whether a helper may file for an owner or what fee terms apply to real-estate surplus. Ask a Tennessee attorney before signing an agreement.

I've been recovering surplus funds since 2013. That's over 2,000 cases and more than $100 million recovered for foreclosure victims across the country. People dealing with a lost home or a court claim deserve patience and care. I'd start by finding who holds the funds. Then ask a Tennessee attorney about your role before contacting owners.

If you want to learn how this business actually works, join the free Surplus Funds Masterclass at surplusfunds.ai, or join the free Surplus Funds Collective community on Skool at skool.com/surplusfunds.

This guide is education, not legal advice. Laws change, so check the official statute and talk to a licensed attorney in your state before you act.