Tennessee Commercial Real Estate Loans: Mortgage Tax & C-PACER

Commercial property loans in Tennessee use the same programs as every other state — SBA 504, DSCR loans, bridge loans, bank and life-company permanent loans. What Tennessee changes is the recording cost and the default path: the state taxes both the deed and the loan, a deed of trust is foreclosed by a trustee's sale with a newer online-notice rule, the two-year redemption right turns on a waiver clause, a deficiency starts from a presumption that the sale price was fair, and C-PACER financing is capped by statute.

Two recording taxes: the deed and the loan

When the deed is recorded, the county register of deeds collects a transfer tax of 37 cents per $100 of the property's value or the price paid, whichever is greater. When the deed of trust is recorded, the register collects an indebtedness tax of 11.5 cents per $100 on the debt over the first $2,000. The deed of trust has to state its maximum principal indebtedness, and the tax is figured on that amount — paid once for the same debt, even if more than one instrument is recorded for it.

Example: a $2,000,000 commercial building bought with a $1,400,000 loan.

• Transfer tax: $2,000,000 ÷ $100 × $0.37 = $7,400
• Indebtedness tax: ($1,400,000 − $2,000) ÷ $100 × $0.115 = $1,607.70
• Total recording taxes: $9,007.70, before the register's recording fees

That is more than Georgia, where the same example carries $2,000 to $6,200 depending on the loan's term, and well above Missouri, which has no transfer tax at all. Because the indebtedness tax follows the stated maximum principal, a refinance that adds new money or a construction loan with a large commitment is worth pricing with the tax in the budget.

Foreclosure by trustee's sale — and the 2025 notice change

Tennessee commercial loans are typically secured by a deed of trust with a power of sale, so a default can lead to a trustee's sale without a court case. The notice rule changed on July 1, 2025: the sale is now advertised at least twice in a newspaper published in the county, the first at least 20 days before the sale, and posted online by a third-party internet posting company for at least 20 continuous days. The trustee also mails a copy of the notice to the debtor and any co-debtor by registered or certified mail on or before the first publication.

That timeline is short — compare Wisconsin, where a commercial foreclosure goes through court. If a sale or refinance is your way out of a troubled loan, start at the first missed payment, and use DSCR to see how far income has fallen short.

The two-year redemption right is usually waived

By statute, a Tennessee borrower can redeem the property for two years after a foreclosure sale — but only if the deed of trust doesn't waive it, and a waiver of the "equity of redemption" is enough. In Swift v. Kirby (1987) the Tennessee Supreme Court held that this standard phrase waives the statutory right as well. Most commercial deeds of trust include it, so expect no redemption period unless your documents say otherwise.

The deficiency starts from the sale price

If the sale brings less than what is owed, Tennessee presumes the sale price equals the property's fair market value. The deficiency is the debt plus foreclosure costs minus that value. To shrink it, the debtor has to prove the property sold for materially less than fair market value; then the court sets the value instead. That is a real but limited protection for anyone who signed a personal guarantee; on a non-recourse loan, read the carve-outs that would turn recourse back on.

C-PACER: capped at 25% of value

Tennessee's Commercial Property Assessed Clean Energy and Resilience (C-PACER) Act of 2021 lets counties and cities opt in to programs that finance energy efficiency, renewable energy, water and resilience improvements on commercial, industrial, agricultural and multifamily property, repaid through a special assessment and lien. The statute caps the assessment at 25% of the property's fair market value, set by a qualified appraiser, and caps the assessment plus existing debt at 90% of that value (properties in the federal low-income housing tax credit program are excepted). On the $2,000,000 example with a $1,400,000 loan, that means up to $400,000 of C-PACER before the 90% line ($1,800,000 total) is reached.

Because the assessment is recorded as a lien on the property, local programs — Metro Nashville’s among them — require the consent of existing mortgage holders; talk to your lender before you sign. Check first that your county or city has adopted a program. C-PACE Desk, a BestLoanUSA site, tracks Tennessee's C-PACE status.

Where to start

Choose the program — SBA 504 for an owner-occupied building, a DSCR loan or permanent loan for an income property, a bridge loan for a transition — and put the two recording taxes in your closing budget. Size the loan with the commercial mortgage calculator. For financing that isn't tied to real estate, the Tennessee business loan guide covers SBA offices and state programs.

Ready to compare? Start a commercial real estate loan request — one application, compared across our lender network.

💡 BestLoanUSA compares bank, SBA, DSCR and bridge lenders for Tennessee commercial property. See how it works — no hard credit pull to start.

Sources: Tenn. Code Ann. § 67-4-409(a)–(b) (via UT County Technical Assistance Service); Tenn. Code Ann. § 35-5-101 and 2025 Pub. Ch. 515 (HB 1127); Tenn. Code Ann. § 66-8-101; Swift v. Kirby, 737 S.W.2d 271 (Tenn. 1987); Tenn. Code Ann. § 35-5-118; Eastman Credit Union v. Bennett (Tenn. Ct. App. 2016); Tenn. Code Ann. §§ 68-205-101 to -116; 2021 Pub. Ch. 138 (SB 795); Metro Nashville, C-PACER Program Guidelines. Checked 2026-10-16.