HB 765 - SB 775
FISCAL NOTE
Fiscal Review Committee
Tennessee General Assembly
March 8, 2025
Fiscal Analyst: Justin Billingsley | Email: justin.billingsley@capitol.tn.gov | Phone: 615-741-2564
HB 765 - SB 775
SUMMARY OF BILL: Requires that 10 percent of sales proceeds resulting from delinquent
property sales be used to provide tax relief for homeowners who are elderly low-income, disabled, or
a disabled veteran or widow of a disabled veteran.
FISCAL IMPACT:
OTHER FISCAL IMPACT
Based on multiple unknown variables, an exact impact to local government revenue and
expenditures cannot be reasonably determined.
Assumptions:
• Pursuant to Tenn. Code Ann. § 67-5-2501(a)(3)(A), any remaining proceeds of a delinquent
property tax sale are required to be distributed according to the following priorities:
o Amounts owing the delinquent tax attorneys prosecuting the cause; then
o The costs of the proceeding exceeding the attorneys' fees; then
o Amounts owing the taxing entities which are parties in the cause; then
o Amounts owing to tax entities filing a claim for current and other delinquent taxes
and interest due them as stated in claims filed in response to certain notices sent
them and for which no action has been filed, divided prorated upon the amount of
the base taxes due each; then
o Any other property taxes and expenses owing any taxing entity secured by a tax lien
on the parcel; then
o Any remaining proceeds must be distributed in accordance with Tenn. Code Ann. §
67-5-2702, whereby certain interested persons may file a motion with the court
requesting disbursement of any excess sale proceeds.
• This legislation will require, before any remaining proceeds may be distributed in
accordance with Tenn. Code Ann. § 67-5-2702, that 10 percent of such remaining amounts
be used to provide tax relief for homeowners who are elderly low-income, disabled, or a
disabled veteran or widow of a disabled veteran.
• This legislation will effectively result in a shift in how proceeds of such sales are distributed
by local governments.
• According to information provided by the Comptroller of the Treasury (COT), the amount
of proceeds to which this 10 percent allocation would apply is unknown.
HB 765 - SB 775 2
• This legislation will reduce by 10 percent such proceeds that may have been allocated by
local governments to purposes outlined in Tenn. Code Ann. § 67-5-2702. Such proceeds
must be paid according to the following priorities to each party that establishes its claim to
the proceeds:
o To the tax entity or entities prosecuting the delinquent tax sale, for any remaining or
subsequent outstanding taxes that are a lien against the property;
o To any lienholder, private or public, holding a claim against the property at the time
of the tax sale, for the amount proven to be due under such lien, in accordance with
priorities established by applicable law;
o To any lienholder, private or public, holding a claim against the property arising
after the tax sale, for the amount proven to be due under such lien, in accordance
with priorities established by applicable law;
o To any taxpayer, according to such taxpayer's interest at the time of the tax sale;
provided, that such taxpayer was a defendant in the underlying action, or acquired
by will or intestate succession the interest in the property of a former taxpayer who
was a defendant in the underlying action; and
o Any remaining excess proceeds shall be subject to the Uniform Unclaimed Property Act.
• Any amount of tax proceeds that were used by local governments for general expenditures
will be reduced by 10 percent; however, it is unknown how many local governments, if any,
rely on such proceeds for general expenditures.
• According to the COT, this legislation may require the offices of the county trustee and the
clerks and master to update software to accommodate the requirements of this legislation.
• Any such increase in expenditures for software updates is unknown, as any such cost is
determined by individual contracts held by each county; however, based upon information
provided by the COT, any such cost is estimated to be not significant.
• Based on multiple unknown variables, an exact impact to local government cannot be
reasonably determined.
CERTIFICATION:
The information contained herein is true and correct to the best of my knowledge.
Bojan Savic, Executive Director