Amends TCA Title 66.

This bill establishes requirements for installment land contracts for the conveyance of real property. "Installment land contract" means a contract for the sale of land providing that the buyer will receive immediate possession of the land and pay the purchase price in installments over time, but that the seller will retain legal title until all payments are made, and includes an executory contract for conveyance of real property, a contract for deed, a land contract, and a land sales contract. This bill applies only to a transaction involving an installment land contract for real property used or to be used as a purchaser's residence. This bill does not apply to sale of land by: this state or a political subdivision of this state; an instrumentality or other entity created to act on behalf of this state or a political subdivision of this state; or an installment land contract that provides for the delivery of a deed from the seller to the purchaser within one 180 days of the date of the final execution of the installment land contract. This summary will highlight some of the requirements for installment land contracts under this bill. For specific details, please consult the bill. Requirements under this bill include the following: (1) A seller may enforce the remedy of rescission or of forfeiture and acceleration against a purchaser in default under an installment land contract only if: (A) The seller notifies the purchaser of: the seller's intent to enforce a remedy under this bill; and the purchaser's right to cure the default within 30 days (as discussed below in (2) and (3)); (B) The purchaser fails to cure the default within the 30-day period; (C) The equity provision discussed below in (4) does not apply; and (D) The contract has not been recorded in the county in which the property is located; (2) The notice referenced above in (1) must be in writing and must be delivered by registered or certified mail, return receipt requested. The notice must clearly inform the purchaser of the noncompliance and that the seller may take possession of the property if the purchaser does not come into compliance within 30 days; (3) A purchaser in default under an installment land contract may avoid the enforcement of a remedy by complying with the terms of the contract on or before the 30th day after the date notice is given; (4) If a purchaser defaults after the purchaser has paid 40 percent or more of the amount due or the equivalent of 48 monthly payments under the installment land contract or, regardless of the amount the purchaser has paid, the installment contract has been recorded, the seller may sell, through a trustee designated by the seller, the purchaser's interest in the property. The seller may not enforce the remedy of rescission or of forfeiture and acceleration after the contract has been recorded. The seller must notify a purchaser of a default under the contract and allow the purchaser at least 60 days after the date notice is given to cure the default; (5) The seller must provide a survey and disclosure of certain property conditions concerning, among other things, the habitability of the property, prior to entering into a contract. Failure to provide the survey and disclosures will be a violation of the Tennessee Consumer Protection Act and will entitle the purchaser to cancel and rescind the installment land contract and receive a full refund of all payments made to the seller; (6) This bill requires the seller to prior various other information, such as information regarding tax payments and insurance coverage. Failure to provide the information will be a violation of the Consumer Protection Act and entitle the purchaser to cancel and rescind the installment land contract and receive a full refund of all payments made to the seller; (7) The seller must provide the financing terms in a separate written statement prior to the contract being signed. The information to be provided includes the purchase price, interest rate, and late fee amounts; (8) This bill prohibits a seller from including as a term of the installment land contract a provision that, among other things: (A) Imposes an additional late-payment fee that exceeds the lesser of: 8 percent of the monthly payment under the contract; or the actual administrative cost of processing the late payment; (B) Prohibits the purchaser from pledging the purchaser's interest in the property as security to obtain a loan to place improvements, including utility improvements or fire protection improvements, on the property; or (C) Imposes a prepayment penalty or any similar fee if the purchaser elects to pay the entire amount due under the contract or an additional portion thereof before the scheduled payment date under the contract; (9) A purchaser may cancel and rescind an installment land contract for any reason by sending appropriate notice not later than the 14th day after the date of the contract. If the purchaser cancels the contract, the seller must return to the purchaser the executed contract and any property exchanged or payments made by the purchaser under the contract and cancel any security interest arising out of the contract; (10) This bill requires the seller to record the installment land contract on or before the 30th day after the date the contract is executed. If the installment land contract is terminated for any reason, the seller must record the instrument that terminates the contract. A seller who violates these provisions will be liable to the purchaser in the same manner and for the same amount as described below in (11), except the damages may not exceed $500 for each calendar year of noncompliance; (11) This bill provides that if an installment land contract has not been recorded or converted (as discussed below in (12)), the seller must transfer recorded, legal title of the property covered by the installment land contract to the purchaser not later than the 30th day after the date the seller receives the purchaser's final payment due under the contract. A seller who violates the transfer provisions will be liable to the purchaser for: (A) Liquidated damages in the amount of: $250 a day for each day the seller fails to transfer the title to the purchaser during the period that begins the 31st day and ends the 90th day after the date the seller receives the purchaser's final payment due under the contract; and $500 a day for each day the seller fails to transfer title to the purchaser after the 90th day after the date the seller receives the purchaser's final payment due under the contract; and (B) Reasonable attorney's fees; (12) A purchaser, at any time and without paying penalties or charges of any kind, may convert the purchaser's interest in property under an installment land contract into recorded, legal title, regardless of whether the seller has recorded the installment land contract. This bill sets out in detail other provisions regarding such a conversion; (13) A purchaser may cancel and rescind an installment land contract at any time if the purchaser learns that the seller has not properly subdivided or platted the property that is covered by the contract in accordance with state and local law. This bill sets out in detail the requirements and restrictions on the right to cancel and rescind under these circumstances; (14) If a seller is liable to a purchaser under this bill, the purchaser, without taking judicial action, may deduct the amount owed to the purchaser by the seller from any amounts owed to the seller by the purchaser under the terms of an installment land contract; (15) This bill requires that a seller own the property in fee simple free from any liens or other encumbrances prior to enter into an installment land contract and requires that the seller maintain fee simple title. There are limited exceptions to this provision, as detailed in this bill. A violation of the lien provisions will be a violation of the Consumer Protection Act and, additionally, the purchaser may rescind the contract, have returned all payments under the contract, and receive other reimbursement; and (16) This bill specifies that only certain provisions will apply to an option to purchase real property that includes or is combined or executed concurrently with a residential lease agreement. Also, only certain provisions will apply to such an installment land contract if the term of the contract is three years or less and the purchaser and seller, or the purchaser's or seller's assignee, agent, or affiliate, have not been parties to an installment land contract to purchase the property covered by the installment land contract for longer than three years.