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Selling tax-delinquent property before a Tennessee tax sale

Behind on property taxes is one of the most common ways Tennessee families lose real equity, because a tax sale only has to cover the tax bill, not what the property is worth. Here is how the process works, how long it takes, what redemption really costs, and why selling on your own terms first usually keeps far more of the value.

Short answer

Tennessee property taxes go delinquent March 1, then grow 1.5% a month until the county sues and the court orders a sale. You can sell before that and pay the taxes from the proceeds at closing. After a tax sale confirmed on or after July 1, 2026, you have one year to redeem, or 90 days if the taxes were more than three years behind.

Licensed Tennessee auctioneerUpdated November 2026

How taxes go from late to a lawsuit

Tennessee property taxes become delinquent on March 1 after the due date.[1] From then on, interest of 1.5% per month is added, starting March 1 and again on the first of every month after.[2][3] That works out to about 18% a year on the unpaid tax.

Collecting county taxes is not left to letters forever. The county trustee turns the delinquent list over to a delinquent tax attorney, who files a lawsuit against the owners in chancery or circuit court.[4][5] The trustee generally hands over the list between February 1 and April 1 of the year after the taxes went delinquent.[5]

City taxes can follow a separate track
Cities can collect their own delinquent property taxes under their charters, or turn them over to the county trustee instead.[6] If you owe both city and county taxes, you may be dealing with two collectors and, in some places, two separate lawsuits.
Paying the delinquent taxes, interest and costs in full ends the tax lawsuit for that property.[4] Every step below is avoidable if the bill gets paid, and a sale of the property is often the way it gets paid.

How a Tennessee tax sale works

If the suit runs its course, the court orders the property sold. The sale is conducted by the court clerk, can be held online, and every tax sale is subject to the owner's right of redemption.[7] Bidding opens at the amount owed: the taxes, interest and costs.

That is the core problem. A tax sale is built to collect a tax bill, not to find the buyer who will pay the most. There is no listing, no showings, and little marketing beyond the legal notices. Tax-sale buyers know that, and they bid accordingly.

Redemption: the second chance, and what it costs

After a tax sale, the former owner (and other interested people) can still get the property back by redeeming it within a set period. Tennessee changed that period in 2026.

Redemption period for sales confirmed on or after July 1, 2026
  • One year from the order confirming the sale, if the taxes were delinquent three years or less.
  • 90 days from that order, if they were delinquent more than three years.
[9][8]

A shorter 30-day period can apply to vacant and abandoned property, but only after inspections over a two-month period document that it is abandoned.[8]

What it takes to redeem
To redeem, you first pay the clerk the delinquent taxes, interest, penalties and court costs, plus interest at 12% a year on the full amount the tax-sale buyer paid, running from the day they paid it. The buyer can also claim certain added costs, such as later taxes and insurance they paid.[8]

Redemption is real, but it is expensive, and it has to be paid in cash within a short window. For most owners who were behind because money was tight, it is harder to redeem after the sale than it would have been to sell before it.

Excess proceeds: what happens to the rest of the money

When a property sells at a tax sale for more than what is owed, the extra is called excess proceeds. It does not go to the county as a bonus. After the court confirms the sale, an interested person can file a motion in the tax suit to claim it. The money is paid in this order:[10]

  1. Any remaining taxes owed to the taxing entity
  2. Lienholders as of the sale, then later lienholders
  3. The former owner, if they were a defendant in the tax suit (or their heirs)
  4. Anything left over goes to the state under the unclaimed property law

There is no fixed one-year filing deadline in the statute. A claim can be filed until the money is actually sent to the state, and the money is not presumed abandoned until a year after the redemption period ends.[10] If you think excess proceeds are owed to you, contact the clerk of the court that handled the tax suit.

Excess proceeds are whatever is left after a sale that was never designed to get full price. Selling the property yourself before the tax sale puts your equity in your hands at closing, instead of leaving you to claim what remains after a discount sale.

Selling before the tax sale

Delinquent property taxes are a lien on the property, the same way a mortgage is. When a property sells, liens are normally paid off at closing from the sale proceeds, and paying the taxes, interest and costs in full ends the tax suit for that property.[4] You do not need to come up with the tax money first to be able to sell.

  • Get the payoff in writing. Ask the county trustee (and the city, if city taxes are owed), or the clerk if the suit is already filed, for the full amount due as of a date. Interest grows every month.
  • Watch the calendar. The earlier you start, the more selling options you have. Once a sale date is set, timing gets tight.
  • Think about every lien. Mortgages, judgment liens and city liens also come out of the proceeds. Knowing the total tells you what you would actually walk away with.

A marketed auction, run by a licensed Tennessee real estate and auction firm, can work on a schedule set around the tax deadline and puts the property in front of buyers who compete for it. In Tennessee, auctions of real property must be run by someone licensed both as an auctioneer and as a real estate broker or affiliate broker. Our guide to land and commercial property explains how those sales run.

Before you sell: check for help paying the taxes

Not everyone behind on taxes wants or needs to sell. If you can keep the property, these are worth checking first:

Partial payments
A county trustee may accept partial payments on delinquent taxes, but only if it has filed a plan with the Comptroller. A partial payment does not release the lien, and the property can still go to tax sale. Once the suit is filed, the clerk generally cannot take partial payments.[11]
Tax relief for older, disabled and veteran homeowners
Tennessee's property tax relief program helps qualifying homeowners who are 65 or older, disabled, or disabled veterans and their surviving spouses. For 2026, the income limit for older and disabled homeowners is $38,470 (based on 2025 income). Applications go through the county trustee, and the taxes must be paid within the deadline to receive relief.[12] Some counties and cities also offer a tax freeze for homeowners 65 and older.[13]

Questions

Common questions

When do property taxes become delinquent in Tennessee?

Tennessee property taxes become delinquent on March 1 after the due date. Interest of 1.5% per month is then added, starting March 1 and again on the first of each month after that.

How long do you have to redeem a property after a Tennessee tax sale?

For sales confirmed on or after July 1, 2026, the redemption period runs from the court's order confirming the sale: one year if the taxes were delinquent three years or less, and 90 days if they were delinquent more than three years. A shorter 30-day period can apply to vacant and abandoned property that has been inspected and documented. To redeem, you pay the purchase price plus 12% annual interest and certain other costs.

Can I sell my house if it has delinquent property taxes?

Yes. The delinquent taxes are a lien on the property, and they are normally paid off at closing from the sale proceeds, the same way a mortgage is. Paying the taxes, interest and costs in full ends the county's tax lawsuit for that property.

What happens to the extra money if my property sells at a tax sale for more than I owe?

The excess proceeds are held by the court. After the sale is confirmed, interested people can file a motion to claim them. They are paid in order: remaining taxes, then lienholders, then the former owner (if they were named in the tax suit, or their heirs). Unclaimed money eventually goes to the state's unclaimed property program.

Can I make payments on delinquent property taxes in Tennessee?

Only in limited ways. A county trustee may accept partial payments if it has adopted a plan with the Comptroller, but a partial payment does not release the lien and the property can still go to tax sale. Once the tax suit is filed, the court clerk generally cannot accept partial payments.

What does it cost to sell through FALCO?

No cost to you. The buyer pays a 10% premium on top of the winning bid, and FALCO is paid from that premium. FALCO does not buy property. Licensed Tennessee real estate and auction firms run every sale.

Sources

  1. [1]University of Tennessee CTAS, Delinquency Date
  2. [2]University of Tennessee CTAS, Interest on Delinquent Taxes (Tenn. Code Ann. § 67-5-2010)
  3. [3]Tenn. Code Ann. § 67-5-2010 (interest on delinquent taxes)
  4. [4]University of Tennessee CTAS, Delinquent Tax Suit
  5. [5]Tenn. Code Ann. § 67-5-2404 (delinquent tax attorney; filing suit)
  6. [6]Tenn. Code Ann. § 67-5-2005 (municipal delinquent taxes)
  7. [7]Tenn. Code Ann. § 67-5-2501 (tax sales; conducted by the clerk; subject to redemption)
  8. [8]Tenn. Code Ann. § 67-5-2701 (redemption)
  9. [9]2026 Tenn. Pub. Acts ch. 971 (SB1983), amending the redemption period
  10. [10]Tenn. Code Ann. § 67-5-2702 (excess proceeds)
  11. [11]Tenn. Code Ann. § 67-5-2001 (partial payments)
  12. [12]Tennessee Comptroller, Property Tax Relief brochure
  13. [13]Tennessee Comptroller, Property Tax Freeze program

Statute text above was checked against the current published Tennessee Code and the 2026 redemption amendment. County practices vary, so confirm amounts and dates with your county trustee or clerk.

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This page is general information about Tennessee and federal law, not legal, tax, or financial advice, and not a promise about any outcome. Laws change and every situation is different. For advice about your circumstances, consult a licensed Tennessee attorney, CPA, or other licensed professional. FALCO is not a law firm, a government agency, or a court, and is not affiliated with any of them. FALCO does not buy, list, broker, or sell anything itself. Licensed Tennessee auction firms, and licensed real estate firms where real estate is involved, run every sale.