It looks like Graceland won't be auctioned off. But how did the possibility ever occur?

Amid the ongoing foreclosure debacle of the Graceland estate, Shelby County Register of Deeds said that they do not have a deed of trust on file for the property.

A representative from the Shelby County Register of Deeds said that this was extremely uncommon and that a typical document filed during foreclosure proceedings like an assignment of substitute trustee or substitute trustee's deed were not on file in the office either.

Wednesday morning, a Memphis judge ruled that a foreclosure auction of Elvis Presley’s iconic Graceland estate cannot proceed. Chancellor JoeDae Jenkins issued the ruling in Shelby County Chancery Court in Memphis. Representatives from the company behind the sale did not appear in court.

Shortly after the hearing, The Daily Memphian reported that "someone claiming to represent the company," said in an email statement Naussany Investments and Private Lending would be dropping their case.

However, the Shelby County Chancery Clerk's office confirmed it has not received any correspondence from Naussany Investments since the court proceeding ended Wednesday.

Why was a foreclosure sale possible for Graceland?

Public notice for the foreclosure sale of the property was posted earlier this month. The notice alleged that Promenade Trust, which controls the Graceland estate at 3734 Elvis Presley Blvd., owed $3.8 million to Naussany Investments and Private Lending after failing to repay a loan taken out by Lisa Marie Presley on May 16, 2018. Naussany says Graceland was used as collateral on the loan.

A foreclosure is the forced sale of a property due to non-payment of a loan. The lender will sell the property to recover the loss of funds due to the owner not paying the balance of a loan.

Tennessee is a "deed of trust state," meaning that in the event of a default on a loan, the lender is required to publicly notice a public sale of the property. This non-judicial sale of a property can be done without going through the courts.

"Tennessee specifically does have a very quick ability for non-judicial foreclosure sale," John D Smith, a real estate attorney in Memphis said.

In Tennessee, the lender is required by state law to issue a notice advertising a public sale for three consecutive weeks in a newspaper of local circulation. Naussany Investments and Private Lending LLC advertised the notice of foreclosure sale in The Commercial Appeal for three consecutive weeks beginning on May 5.

"It used to be some time ago that there was a requirement that you had to give an actual notice of default to the borrower and that the publication could not start until 60 days had passed from that initial notice of default," Smith said.

Attorneys: Potential Graceland foreclosure was unusual

Darrell Castle, another attorney who specializes in foreclosures in Memphis, said that these circumstances are not common.

"I'm not sure I have seen it before. OK, of course, I've only been doing this for 40 years," Castle said. "How do you foreclose without it, without a deed (of trust)? I don't get that one."

Smith also said this is uncommon, and it complicates the foreclosure process.

According to Rocket Mortgage, a deed of trust is a documented agreement between a lender and a home buyer at the closing of a property. A deed of trust is similar to a mortgage but involves a third party that uses the home as collateral for a loan.

The third party holds the estate's legal title, in the event that the purchaser cannot pay the loan the third party would then hold the rights to the property.

In the case of the Graceland estate, there is no deed of trust on file for the property. Smith said in the case of the now defunct foreclosure sale of Graceland, Tennessee is a "race-notice state," which means that a deed of trust must be of record in order for it to be enforceable.

"If it's true, that (the deed of trust) is not there, I think that that would give a strong case for Elvis's heirs or granddaughter to make the case that this is a fraudulent transaction," Smith said.

Memphis-based law firm Morton and Germany is representing Keough and Promenade Trust. During Wednesday's hearing, attorney Jeff Germany argued that without any opposition present, the court should adhere to the facts presented before it. Germany discussed the alleged falsified deed of trust attached to the lawsuit.

In the lawsuit, the defense claims a stamp from notary Kimberly Philbrick, whose notary stamp appeared to be listed on the deed of trust, was forged. Germany said Philbrick has attested she did not notarize any such document, nor has she met ever Lisa Marie Presley.

Brooke Muckerman covers Shelby County Government for The Commercial Appeal. She can be reached at (901) 484-6225, brooke.muckerman@commercialappeal.com and followed on X, formerly known as Twitter @BrookeMuckerman.

This article originally appeared on Memphis Commercial Appeal: Here's why Graceland foreclosure sale was able to get so far in Memphis