Tennessee Seller Financing for Land: How to Sell Vacant Land on Terms

Tennessee land sellers ask me the same few questions before they offer terms. Is it legal here? What paperwork do I use? What happens if the buyer stops paying? What rate can I charge? Do I need a license? Here are the answers, with a link to the Tennessee law or state agency behind each one.

I am not a lawyer, and this is not legal advice. Many of these rules depend on the facts of your deal, so have a Tennessee real estate attorney or title company draft your documents.

Can You Sell Land With Seller Financing in Tennessee?

Yes, and the usual setup is a promissory note secured by a deed of trust on the land.

You sell the land, the buyer gets the deed at closing, and the buyer signs a promissory note to pay you over time. The note is secured by a deed of trust recorded on the land. If the buyer stops paying, the deed of trust lets a trustee sell the land to pay off what is owed.

Tennessee's recording law lists "all mortgages and deeds of trust" as instruments that can be registered (Tenn. Code Ann. § 66-24-101), and its foreclosure notice law covers sales of land under a deed of trust or mortgage (§ 35-5-101). Seller financing is not a loophole. It is a regular sale with a recorded lien.

Should You Use a Deed of Trust or a Land Installment Contract in Tennessee?

Use a promissory note and a deed of trust; a land installment contract keeps you on title, and we do not buy them.

With a land installment contract, also called a contract for deed, you keep the deed until the buyer pays in full. That leaves your name on title for years. With a note and deed of trust, the buyer owns the land from day one and you hold a lien. That is cleaner to foreclose, insure, and sell.

	Note and deed of trust	Land installment contract
Who holds title	Buyer, from closing	Seller, until paid in full
What gets recorded	Warranty deed to the buyer, then the deed of trust	Often only a memorandum, sometimes nothing
If the buyer defaults	Trustee sale under the power of sale, with the notice in § 35-5-101	Depends on the contract and the court; ask a Tennessee attorney
Can you sell it to us?	Yes, 80 to 90% of balance	No, we do not buy land contracts

I cover the five biggest problems in why to avoid land contracts when seller financing land. In my experience, the paperwork you pick on day one decides what your note is worth later.

How Does Foreclosure Work on a Tennessee Deed of Trust?

If the deed of trust has a power of sale, the trustee can sell the land without a lawsuit after giving the notice Tennessee law requires.

Tennessee lets the trustee named in the deed of trust run a public sale. Since July 1, 2025, the notice must run twice in a local newspaper, the first time at least 20 days before the sale, and be posted online for 20 straight days. The buyer must also get a copy by certified or registered mail.

The 2025 change came from House Bill 1127, Public Chapter 515 (Tennessee General Assembly bill record). Here is what § 35-5-101 requires now:

• Newspaper. At least two publications in a newspaper published in the county of the sale, the first at least 20 days before the sale.
• Online. A posting by a third party internet posting company for at least 20 continuous days, open to the public. The company must register its website with the Secretary of State.
• Mail to the buyer. A copy of the notice to the debtor and any co-debtor by registered or certified mail, return receipt requested, on or before the first publication date.
• Postponements. A sale can be moved without new newspaper ads if it happens within one year. If it moves more than 30 days, the new date goes to the debtor by regular mail at least 10 days before the sale.

Read your deed of trust too. Have a Tennessee attorney advise the trustee, and follow both the statute and your document. For how Tennessee compares, see our foreclosure timelines by state.

What Interest Rate Can You Charge on Tennessee Seller Financing?

It depends on how the deal is set up, so check the Tennessee formula rate and have an attorney set your rate.

For a written loan contract, Tennessee's cap is the "applicable formula rate," which is prime plus 4 points, never above 24%. On August 25, 2026, the state set it at 10.75%. But a seller's credit sale price can be treated differently than loan interest, unless the buyer will live on the property.

• The cap. § 47-14-103 sets the maximum: a rate set by another statute if one applies, the applicable formula rate for written contracts signed by the borrower, and 10% for everything else.
• The formula. § 47-14-102(7) defines it as 4 points above the Federal Reserve's average prime rate, or 24%, whichever is less.
• The current number. The Department of Financial Institutions announces it weekly. Its August 25, 2026 notice set it at 10.75%, based on a 6.75% prime rate. Check the TDFI news page for the latest week before you sign.
• Credit sales. § 47-14-102(11) defines a "time price differential" as the gap between the cash price and the price when payment is deferred. On real property the buyer will own and live in as a principal residence, that gap counts as interest.
• The penalty. Under § 47-14-117, a contract that requires usury on its face is not enforceable as written. The lender can recover principal plus lawful interest, and loses more if a court finds the conduct unconscionable.

Do not guess at the rate. Whether the cap reaches your sale depends on the buyer, the property, and how the price and note are written. That is a question for a Tennessee real estate attorney.

Do You Need a Mortgage License to Seller Finance Land in Tennessee?

Tennessee's mortgage license law is written for loans secured by a dwelling, so raw land often falls outside it, but a home on the land changes the question.

The Tennessee Residential Lending, Brokerage and Servicing Act requires a license to act as a mortgage lender. Its "residential mortgage loan" is a loan mainly for personal, family, or household use secured by a dwelling. Vacant land with no home is not a dwelling. If a home is on the land or planned, get advice first.

• Who needs a license. No one may act as a mortgage lender, broker, or servicer in Tennessee without one (§ 45-13-201; see the TDFI mortgage company page). A "mortgage lender" is anyone who makes a residential mortgage loan.
• What counts. § 45-13-105 defines a residential mortgage loan as credit mainly for personal, family, or household use, secured by a dwelling as defined in the federal Truth in Lending Act: a residential structure or mobile home with one to four units (15 U.S.C. § 1602(w)).
• Exemptions. § 45-13-201(b) exempts, among others, loans to an immediate family member, loans secured by a dwelling that was the lender's own residence, and a seller who makes five or fewer residential mortgage loans in any 12 months and does not hold out to the public as a mortgage lender.

The same Act defines "residential real estate" to include land where a dwelling is "intended to be constructed." If there is a home on the land, or the buyer plans to build and live there, ask a Tennessee attorney or call TDFI before you sell.

Does Dodd-Frank Apply to Seller Financing Land in Tennessee?

The federal rules are the same in every state, and the biggest ones are aimed at consumer loans secured by a dwelling.

Federal rules sit on top of Tennessee law. The ability to repay rule and most loan originator rules cover consumer loans secured by a dwelling, and business purpose credit to an LLC is generally outside Truth in Lending. How many consumer deals you do each year also matters. I cover it in my Dodd-Frank and seller financing land guide.

How Do You Close and Record a Tennessee Seller Financed Sale?

Close through a Tennessee title company and record the warranty deed and the deed of trust with the county register of deeds.

A title company checks title, collects the down payment, has the papers signed and notarized, and records them. Recording matters. In Tennessee an unrecorded instrument is void against the maker's creditors and good faith buyers without notice, so an unrecorded deed of trust could lose to them.

• Signing. Each document needs an original signature that is acknowledged, usually before a notary, or proved by two witnesses. The register can refuse anything else (UT County Technical Assistance Service on § 66-22-101).
• Recording. Unregistered instruments are "null and void" as to the maker's existing or later creditors and buyers without notice (§ 66-26-103).
• Recording taxes. Tennessee charges a transfer tax of $0.37 per $100 of the price and a mortgage tax of $0.115 per $100 of debt, with the first $2,000 exempt (Tennessee Department of Revenue). On a $100,000 sale with an $80,000 note, that is $370 of transfer tax and $89.70 of mortgage tax, plus the register's recording fees.
• Title insurance. Ask for a lender's title policy on your deed of trust so your lien is insured, not just the buyer's ownership.

What Are the Steps to Sell Tennessee Land With Seller Financing?

Set your terms, screen the buyer, have a Tennessee title company or attorney draft the note and deed of trust, close, record, and use a servicer.

1. Set the price and terms. Down payment, rate, term, and payment. Check the current Tennessee formula rate first.
2. Screen the buyer. Is the buyer a person or an LLC? Will they live on or build on the land? Those answers change which rules apply.
3. Sign a purchase contract that states the financing terms. Put the note terms in writing before anyone pays a deposit.
4. Open title with a Tennessee title company. They search title and order a lender's policy for your lien.
5. Have the documents drafted. A Tennessee real estate attorney or the title company prepares the promissory note, the deed of trust with a power of sale, and the warranty deed.
6. Close. The buyer pays the down payment, everyone signs before a notary, and the buyer gets the deed.
7. Record right away. The warranty deed first, then the deed of trust, at the county register of deeds.
8. Service the loan. Use a loan servicer for payments and year end statements. Keep the original signed note somewhere safe.

If you plan to sell the note, tell us before closing. With our sell at closing program, we provide the loan documents and buy the note at closing.

Can You Sell a Tennessee Land Note for Cash?

Yes. We buy Tennessee seller financed land notes for 80 to 90% of the balance.

We buy promissory notes secured by a deed of trust or mortgage on Tennessee land, performing or not, with no seasoning. The note needs a $25,000 minimum balance, a $50,000 minimum property value, a $10,000 minimum buyer down payment. What we pay for the note stays at or under 65% of the land's value. We do not buy land contracts.

See what yours is worth with the note value calculator, read how we buy land notes, or see our Tennessee land loans and note buying page.