Tennessee 2025-2026 Regular Session

Tennessee Senate Bill SB1079 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1
2	2	HOUSE BILL 871
3	3	By Rudder
4	4
5	5	SENATE BILL 1079
6	6	By Johnson
7	7
8	8
9	9	SB1079
10	10	001283
11	11	- 1 -
12	12
13	13	AN ACT to amend Tennessee Code Annotated, Title 66,
14	14	relative to the use of escrow funds for
15	15	condominium projects.
16	16
17	17	BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
18	18	SECTION 1. Tennessee Code Annotated, Section 66-27-506, is amended by deleting
19	19	the section and substituting:
20	20	(a) As used in this section, "actual costs" includes expenditures for construction
21	21	materials and labor, including demolition and site clearing costs, permit fees, impact
22	22	fees, utility reservation fees, and architectural, engineering, and surveying fees that
23	23	directly relate to the construction and development of the condominium project or any
24	24	easements and rights appurtenant thereto.
25	25	(b)
26	26	(1)
27	27	(A) For a deposit that is made in connection with the purchase of
28	28	a unit from a declarant, the amount of such deposit up to the first ten
29	29	percent (10%) of the purchase price must be placed in escrow and held in
30	30	this state in an account designated solely for such purpose by a licensed
31	31	title insurance company or agent of the licensed title insurance company,
32	32	an attorney, a licensed real estate broker, or an independent bonded
33	33	escrow company, and must be deposited in an institution whose accounts
34	34	are insured by a governmental agency or instrumentality, or any other
35	35	lawful escrow or trust account. The declarant may access the funds any
36	36	time prior to commencement of construction until completion of
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38	38
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41	41	construction for payment of actual costs in the construction and
42	42	development of the condominium only if:
43	43	(i) A surety bond is issued by a licensed surety company
44	44	in an amount equivalent to the deposit being requested, ensuring
45	45	repayment to the buyer if the declarant fails to deliver the unit in a
46	46	timely manner in accordance with the purchase contract; or
47	47	(ii) An irrevocable letter of credit or other equivalent
48	48	financial guarantee is provided, payable to the buyer, for the full
49	49	amount of the deposit held in escrow, if the declarant fails to
50	50	deliver the unit timely in accordance with the purchase contract.
51	51	(B) The funds must remain in escrow or the surety bond or
52	52	irrevocable letter of credit, if applicable, must remain in effect until the
53	53	funds are:
54	54	(i) Delivered to the declarant at closing;
55	55	(ii) Delivered to the declarant because of purchaser's
56	56	default under a contract to purchase the unit;
57	57	(iii) Refunded to the purchaser;
58	58	(iv) lnterpleaded into a court of appropriate jurisdiction; or
59	59	(v) Disbursed pursuant to a final order of a court of
60	60	appropriate jurisdiction.
61	61	(2) The amount of the deposit in excess of ten percent (10%) of the
62	62	purchase price, to the extent received after commencement of construction but
63	63	prior to the completion of construction by the declarant, may be placed in a
64	64	separate escrow account and used for the actual costs incurred by the declarant
65	65	in the construction and development of the condominium property in which the
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70	70	unit to be sold is located, if the purchase or reservation contract allows for the
71	71	use of the deposit in such manner; provided, that the funds shall not be used for
72	72	salaries, commissions, expenses of real estate licensees, or advertising
73	73	purposes.
74	74	(3) A contract that permits the use of the deposit for the purposes
75	75	described in subdivision (b)(1) or (2) must be initialed by the buyer and include
76	76	the following language in boldfaced type or capital letters no smaller than the
77	77	largest type on the first page of the contract:
78	78	DEPOSITS MADE TO THE DECLARANT UNDER THIS AGREEMENT MAY BE
79	79	USED FOR CONSTRUCTION PURPOSES BY THE DECLARANT IN
80	80	ACCORDANCE WITH TENNESSEE CODE ANNOTATED, SECTION 66 -27-
81	81	506.
82	82	SECTION 2. This act takes effect July 1, 2025, the public welfare requiring it, and
83	83	applies to contracts or agreements entered into or amended on or after that date.