How much interest does a Tennessee taxpayer owe when filing a motion to redeem property that was sold at a delinquent tax sale?

Subject

Opinion No. 15-22, Payment of Interest When Filing Motion to Redeem Property Sold at Delinquent Tax Sale, March 17, 2015

Plain-English summary

A chancellor asked the AG how to compute the interest a property owner has to pay when filing a motion to redeem real estate that was sold at a delinquent tax sale. Under Tenn. Code Ann. § 67-5-2701(b), the owner must pay interest of 1% per month on the purchase price, calculated this way: 1% is imposed on the date of the tax sale itself, and an additional 1% is imposed on the first day of each month following the tax sale, "and continuing until thirty (30) days after the filing of the motion to redeem." So at a minimum, the owner will owe two months of interest in nearly every case, because even a quickly filed motion still has its 30-day tail running across the first of the next month.

The AG also clarified a related route: under Tenn. Code Ann. § 67-5-2701(i), a delinquent owner can avoid the motion-to-redeem process entirely by paying the delinquent taxes, costs, and interest before the court enters an order confirming the sale. In that scenario the same 1%-per-month rate applies starting on the date of sale, but because there is no motion to redeem, the owner does not pay for a month start that happens to fall in the 30-day window after a (nonexistent) motion.

Currency note

This opinion was issued in 2015. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

When property is sold at a Tennessee delinquent tax sale, the original owner has a statutory window to redeem it by paying back delinquent taxes, penalties, court costs, and interest on the purchase price the tax-sale buyer paid. The interest rate is set by Tenn. Code Ann. § 67-5-2701(b) at "one percent (1%) per month, levied beginning on the date of sale and thereafter on the first day of each month and continuing until thirty (30) days after the filing of the motion to redeem."

The AG read that text literally. The first 1% attaches on the date of the tax sale itself, no matter what day of the month that is. Each subsequent month, on the first day, another 1% attaches. The accrual keeps running through any month start that falls inside the 30-day window after a motion is filed.

The result: the AG observed that "ordinarily a minimum of 2% in interest will be due because the first day of the next month will occur before thirty days have run after the motion to redeem is filed, even if the motion is filed promptly."

A separate path: paying before confirmation

Tenn. Code Ann. § 67-5-2701(i) gives a delinquent owner a different option. Before the court enters an order confirming the sale, the owner can tender "the full amount owing in the proceeding," which includes interest on the purchase price computed at the same 1%-per-month rate from subsection (b). The taxpayer who uses this path is not technically "redeeming" (because confirmation has not occurred, they are still the record owner). They still owe the 1%-per-month interest, but the 30-day-after-motion tail does not apply because there is no motion.

Common questions

Does this rate compound?
The opinion described a simple 1% per month on the purchase price, not compounded. Each new 1% slice is added independently on the first day of each month.

What's the worst-case interest if a redemption motion sits for a while?
The motion's filing does not stop the meter. The statute keeps accruing 1% on each month start through 30 days after filing. So a motion filed near the end of a month will still produce another full 1% as soon as the next month's first day rolls in. If the motion is then resolved quickly, the meter stops; if it drags, more month-starts come and go.

What's the difference between redemption and paying off before confirmation?
Redemption happens after the sale has been confirmed, returning title to the original owner. Paying off before confirmation keeps title where it has been all along (because the sale never gets confirmed), and avoids the motion-to-redeem 30-day tail. Either way, the owner still pays the 1%-per-month interest from the date of sale.

Did the AG resolve disputes about what counts as "the date of sale"?
The opinion took "date of sale" as a given. It did not address fact-specific disputes about, for example, what happens if the sale is rescheduled or invalid. Those issues would need a fact-specific analysis.

Citations

The opinion turns on a textual reading of Tenn. Code Ann. § 67-5-2701(b) and (i). No external cases are cited.

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2015/op15-22.pdf

Original opinion text

March 17, 2015
Opinion No. 15-22

Payment of Interest When Filing Motion to Redeem Property Sold at Delinquent Tax Sale

Question

How should interest on the purchase price be computed under Tenn. Code Ann. § 67-5-2701 when a taxpayer files a motion to redeem property sold at a delinquent tax sale?

Opinion

Under Tenn. Code Ann. § 67-5-2701(b), when a taxpayer files a motion to redeem property, the taxpayer must pay interest on the purchase price at the rate of one percent (1%) per month, to be calculated as follows: one percent is imposed on the date of the tax sale and an additional one percent is imposed on the first day of each month following the tax sale, including the first day of any month that falls within the thirty-day period following the filing of the motion to redeem.

ANALYSIS

A taxpayer seeking to redeem property sold at a delinquent tax sale must "pay to the clerk of the court an amount equal to the total amount of delinquent taxes, penalty, interest, court costs, and interest on the entire purchase price paid by the purchaser of the parcel." Tenn. Code Ann. § 67-5-2701(b). Interest on the purchase price is computed "at the rate of one percent (1%) per month, levied beginning on the date of sale and thereafter on the first day of each month and continuing until thirty (30) days after the filing of the motion to redeem." Id.

In accordance with the language of Tenn. Code Ann. § 67-5-2701(b), when a taxpayer files a motion to redeem property, the taxpayer must pay (1) interest of 1% starting on the date of the tax sale and (2) additional interest of 1% for the first day of each month following the sale, including the first day of any month that falls within the thirty-day period following the filing of the motion to redeem.

Your request indicates that there is confusion as to whether the taxpayer filing the motion to redeem must pay an additional one percent in interest if the tax sale occurs at any time other than on the first day of the month. Tennessee Code Annotated § 67-5-2701(b) requires the redeeming party to pay 1% in interest as of the date of the tax sale, and an additional 1% on the first day of each subsequent month, until thirty days have elapsed after the motion to redeem was filed. Thus, ordinarily a minimum of 2% in interest will be due because the first day of the next month will occur before thirty days have run after the motion to redeem is filed, even if the motion is filed promptly.

Your request addresses the computation of interest on the purchase price when a taxpayer files a motion to redeem property. It should be noted, however, that a taxpayer may retain the property, without filing a motion to redeem, if the taxpayer pays the delinquent taxes, interest, and penalty on the property, as well as interest on the purchase price, before entry of an order confirming the sale. See Tenn. Code Ann. § 67-5-2701(i) (providing that "[i]n the event a person tenders the full amount owing in the proceeding at a time after the date of sale and prior to the entry of an order confirming the sale, the person shall also pay interest computed as established by subsection (b) on the total purchase price paid by the purchaser"). In that circumstance, the taxpayer is not moving to redeem the property because, absent an order of confirmation, the taxpayer remains the record owner of the property. But the taxpayer still is required to pay interest on the purchase price at the rate of 1% per month, beginning on the date of the sale and thereafter on the first day of each month following the sale but before payment. See Tenn. Code Ann. § 67-5-2701(b). Inasmuch as this procedure does not involve a motion to redeem, however, the taxpayer need not pay interest for the first day of the month that falls within the thirty-day period following payment.

HERBERT H. SLATERY III
Attorney General and Reporter

ANDRÉE SOPHIA BLUMSTEIN
Solicitor General

MARY ELLEN KNACK
Senior Counsel

Requested by:
The Honorable Ronald Thurman
Chancellor
Thirteenth Judicial District
321 East Spring Street, Suite 307
Cookeville, Tennessee 38501