AN ACT to amend Tennessee Code Annotated, Title 8 and Title 66, relative to the transfer of real property.
Impact
If enacted, SB1184 will significantly impact the operations of nonprofit property owners' associations, especially those managing large communities with over 5,000 lots or units. The funds generated from the transfer fees can enhance communal facilities and ensure the maintenance of infrastructure, which may lead to improved property values within those communities. Moreover, the bill mandates yearly increases in the fee, aligned with any increase in annual member assessments, which may ensure a continuous revenue stream for maintenance activities. This provision also establishes a system for placing a lien on properties if the fee is not collected, enhancing the financial security of the associations.
Summary
Senate Bill 1184 aims to amend the Tennessee Code Annotated, particularly Title 8 and Title 66, with a focus on the transfer of real property within communities governed by nonprofit associations. The bill introduces a mechanism that requires any transferee of real property in such communities to pay a fee of $2,500 to the respective nonprofit association. This fee is intended to be deposited into a reserve fund, which will be used for maintaining and improving the community's infrastructure, such as roads and utility services. The bill explicitly outlines the responsibilities of both the nonprofit associations and the business entities conducting property closings regarding the collection and remittance of this fee.
Enactment
The provisions set forth in SB1184 are slated to take effect on January 1, 2024, and will apply to all property transfers within affected communities occurring on or after this date. This advance notice allows stakeholders to prepare for the changes, and nonprofit associations will be required to officially record the new fee structure for transparency. Overall, the effective management of these funds could play a crucial role in the sustainability and development of community infrastructure, but the response from homeowners and potential property buyers will be a key factor in the bill's acceptance and long-term impact.
Contention
The bill's provisions may stir debate around the imposition of additional fees on property transfers and how these could affect both buyers and sellers within these communities. Critics may argue that the required fee could discourage property sales or make entering contracts more cumbersome for potential buyers. Moreover, the automatic lien on properties for non-payment of the fee brings forth concerns about property owners' rights and responsibilities, as the potential for judicial foreclosure for unpaid fees might appear excessive to some stakeholders. Thus, while SB1184 aims to strengthen community-funded infrastructure, it could also raise questions regarding fairness and the economic implications for property transactions.