SB2550113th GA (Historical)Enacted

Amends TCA Title 5; Title 8; Title 13; Title 26 and Title 67.

SALE OF LAND FOR COUNTY TAXES ONLY Present law requires that when land must be sold for payment of delinquent county taxes only, it must be sold under the law regarding a tax lien for sale of property, the law regarding delinquent taxes, and the law regarding tax lien enforcement so far as they apply. The bill replaces the present law and, instead, requires that when a parcel is sold for payment of delinquent taxes, it must be sold pursuant to the law regarding a tax lien for the sale of property. This is procedural and remedial in its application and applies retroactively to the extent allowed by law. SCHEDULES – LEASED PROPERTY Present law provides that for the purpose of assessing leased property, it is the duty of the taxpayer to list fully on a schedule provided by the assessor all tangible personal property that is leased by the taxpayer for the conduct of the taxpayer's business. Present law requires leased property to include equipment, machinery, and all tangible personal property used in the conduct of, or as a part of, the taxpayer's business. The lessor, or owner of leased tangible personal property, must provide such information as the assessor may request regarding the location, valuation, or use of such property. This bill provides that, subject to the present law above, each item of tangible personal property required to be listed on the schedule is subject to a first lien securing the property taxes, interest, and court costs as may be levied upon the total assessment of tangible personal property. FILING AND PROSECUTION OF SUITS Under the law regarding tax lien enforcement, present law requires the attorney to after February 1, and not later than April 1, file suits in the circuit or chancery court of the county for the collection of delinquent land taxes due the state, county, and municipality, as well as the interest, penalties, and costs attached to and a part of such taxes, which taxes, interest, penalties, and costs are declared a lien upon the land; and, for the enforcement of this lien, suits must be brought in the name of the county, in its own behalf and for the use and benefit of the state, municipality, or other tax entity that has certified a delinquent tax list, or in the name of any such tax entity that has certified a delinquent tax list, in its own behalf and for its own use and benefit. This bill revises the present law above to, instead, require the delinquent tax attorney to, not later than the last business day of March following the publishing of a notice of intent to file suit, file judicial actions for the collection of delinquent real and personal property taxes due the county and municipality as well as the interest and costs attached to and a part of the taxes, which taxes, interest, and costs are declared a first lien upon the assessed parcels of real and personal property. The costs must include all expenses authorized by law or by the court, including attorney fees. The judicial actions must be brought in the names of the taxing entities that have certified a delinquent tax list with the delinquent tax attorney or the court. NOTICE OF SALE OF LAND Present law provides that a person, who is either expressly or impliedly authorized by another person to receive mail on behalf of the other person, is authorized to sign a receipt on behalf of the other person accepting registered or certified mail or correspondence delivered by an alternative delivery service, containing either a summons, complaint, or summary of the proceeding or a notice that has been or is to be filed in a tax proceeding. In every tax proceeding, the burden of proving by clear and convincing evidence that a person who signed such a receipt for a different person and was, in fact, at that time expressly prohibited in writing from accepting mail for the second person, must be upon the person challenging the sufficiency of the service or notice. This bill adds to the present law above by authorizing proof of delivery of summons, notice, or other correspondence filed or to be filed in the proceeding, by certified mail, return receipt requested, or by an alternative delivery service with return receipt requested, to also be proved by reference to the tracking records located on the website of the delivery service. The failure of a person accepting the mail provided to fully complete the receipt with a legible signature, a printed name, and delivery date, creates a presumption that the receipt was executed by the addressee or a person with authority or implied authority to accept mail and service of process for the addressee. However, the presumption may be rebutted in the manner set out in the present law above. Present law requires the delinquent tax attorney to make a reasonable search of the public records in the offices of the assessor of property, trustee, the register of deeds, and the local office where wills are recorded, seeking to identify and locate all interested persons as to each parcel listed on the county and municipal delinquent tax lists filed in the cause. The court must set a reasonable attorney's fee per parcel, per year of delinquent taxes owed, and per taxing entity, for the services required, which must become an additional expense of the proceeding and must be secured by the first lien in favor of the tax entity pursuant to the law relevant to taxes on which lien based. The fee must be charged to each pending parcel listed on the county and municipal delinquent tax lists filed in the tax proceeding and each parcel subsequently turned over for collection in a tax proceeding. As used in the present law above, "proceeding" and "proceedings" means a judicial proceeding filed by a governmental entity for the purpose of collecting delinquent property taxes owing the entity or including the enforcement of the first lien securing such taxes. This bill revises this definition to, instead, mean a judicial proceeding filed by a governmental entity for the purpose of the enforcement of the first lien securing such taxes. ATTACKS ON SALE OF LAND Present law requires a person who buys real estate sold for delinquent taxes with a lien thereon and who fails to get a good title or to recover possession of the realty, to be subrogated to all liens that secured the taxes, and all interest, costs, penalties and fees; and such person has the right to enforce the same in chancery for the reimbursement of the purchase money paid by such person. Present law provides that a tax deed of conveyance or an order confirming the sale is an assurance of perfect title to the purchaser, and no such conveyance must be invalidated in court, except by proof that the land was not liable to sale for taxes, or that the taxes have been paid before the sale or that there was substantial noncompliance with mandatory statutory provisions relating to the proceedings. If any part of the taxes for which the land was sold is illegal or not chargeable against it, but a part is chargeable, then that must not affect the sale, nor invalidate the conveyance, unless it appears that before the sale the amount legally chargeable against the land was paid to the county trustee, and no other objection either to the sale or the title must avail in any controversy involving them. Present law prohibits a suit from being commenced in a state court to invalidate tax title to land until the party suing has paid to the clerk of the court the amount of the bid and all taxes subsequently accrued. A suit to invalidate any tax title to land must be commenced within one year from the date the cause of action accrued. The statute of limitations to invalidate the sale of any tax title is one year, except it may be extended to one year after the plaintiff discovered or with the reasonable due diligence should have discovered the existence of such cause of action. In no event must any action to invalidate any tax sale title be brought more than three years after the order confirming the tax sale. Present law provides that in cases where the state is not the holder of the legal title to the property bought by it at a tax sale for delinquent taxes, any person desiring to attack the validity of such sale may do so by making only the holder of the legal or equitable title and those persons claiming through such holder who are parties to such suit. Present law requires any person successfully challenging the validity of a tax sale of the person's interest in a parcel to also be responsible for any increase in the value of the parcel from the date of the entry of the order confirming the sale until the entry of a court order declaring the tax sale invalid as to the challenger. The challenger is responsible for all amounts expended by the purchaser or the purchaser's successors, if such amount is in excess of the increased value of the parcel. Present law authorizes an interested person to file an action to challenge a tax title or the instrument conveying such title if the delinquent tax attorney fails to make a diligent effort to give notice of the proceeding. Any challenge to a tax title based on lack of notice to an interested party must be considered an action to invalidate the sale of a tax title and such action is subject to the provisions of existing law applying to actions to invalidate the sale of a tax title. This bill provides that the present law relevant to attacks on sale of land does not presuppose a valid vestiture of title in the purchaser at the tax sale. NEIGHBORHOOD PRESERVATION ACT Under present law, the Neighborhood Preservation Act requires an owner of residential property to maintain the exterior of such property at a level that is no less than the community standards of the residential property in the area. That act applies to Nashville-Davidson, Memphis, Shelby County, Madison County, and any county or municipality that has formed a land bank pursuant to the Tennessee Local Land Bank Program. This bill clarifies that the Neighborhood Preservation Act does not apply to the following: (1) Liens securing the payment of property taxes, interest thereon, and court costs in proceedings to enforce the lien; (2) Tax sales conducted pursuant to the law regarding property taxes; (3) Parcels sold or ordered by a court to be sold at tax sales; or (4) A requirement or provision in the law relevant to taxes and licenses. This bill provides that a receiver's lien created under the Neighborhood Preservation Act is secondary to a first lien securing property taxes. Present law authorizes an acceptable petitioner to file a petition for a judgment in rem against a subject parcel, naming the subject parcel as the defendant and seeking an order that the subject parcel is a public nuisance and for the abatement of the public nuisance. Present law provides that the filing of a petition for a judgment in rem creates a receiver's lien that secures an undetermined amount until the court establishes the amount. The precise amount of the receiver's lien must be established by the court at any time upon the request of any owner, interested person, or the receiver. The receiver's lien must be a first lien on the subject parcel, which is superior to all prior and subsequent liens or other encumbrances associated with the subject parcel. The acceptable petitioner must file for record in the county's register's office, amongst other things, a brief statement of the nature and amount of the lien sought to be imposed, all in compliance with existing law, which filing must act as a lien lis pendens against the subject parcel. This bill changes the present law by, instead, providing that the receiver's lien is a first lien on the subject parcel, which is superior to all prior and subsequent liens or other encumbrances associated with the subject parcel with the exception of liens securing the payment of property taxes as set out in the law regarding property taxes. The receiver's lien is secondary to the first lien securing property taxes. Present law provides that the filing of a petition for a judgment in rem acts as a bar of any transfer of title of the subject parcel or of any interests pertaining to such subject parcel, including transfers by tax sale or other foreclosure, transfers or creation of lien interests in the subject parcel, or otherwise, from the date of the filing until the petition is dismissed or until specific orders of the court authorizing a transfer of title, if the petition has attached a certificate of public nuisance. This bill revises the present law by removing a tax sale from the list of transfers of titles. Present law requires that if the receiver's lien is not satisfied by the owner, then the court must direct the receiver to offer the subject parcel for sale in accordance with certain conditions, including the following: (1) The receiver must report the prevailing bid at the sale to the court, and upon approval by the court, a receiver's deed must be issued to the successful bidder and promptly recorded in the office of the register of deeds; (2) The county trustee is allowed a credit pursuant to existing law for any local taxes and assessments that are not collected as a result of the failure of the receiver's lien sale to receive a cash payment for the minimum bid; (3) Title must be absolute in the purchaser, and the interests of any interested persons prior to the auction must be terminated as of the date of the sale; and (4) The receivership must be terminated after the sale by order of the court after a hearing on receiver's motion for termination of the receivership. This bill deletes (1)-(4) above and, instead, adds as another condition that the sale procedures set out in the Neighborhood Preservation Act do not apply to tax sales conducted pursuant to the law regarding property taxes. TENNESSEE LOCAL LAND BANK PROGRAM Under present law, the Tennessee Local Land Bank program authorizes any local government to create a corporation to operate a land bank in order to facilitate the return of vacant, abandoned and tax-delinquent properties to productive use. This bill provides that the Program does not apply to the following: (1) Liens securing the payment of property taxes, interest thereon, and court costs in proceedings to enforce the lien; (2) Tax sales conducted pursuant to the law regarding property taxes; (3) Parcels sold or ordered by a court to be sold at tax sales; or (4) A requirement or provision in the law relevant to taxes and licenses. Present law provides that a local government has the authority to create a corporation that is authorized to operate a land bank within the jurisdictional boundaries of the local government establishing the corporation. This bill provides that the corporation has the power, as limited by the legislative body of the creating local government or local governments, to bid at a tax sale conducted pursuant to the law regarding property taxes, subject to the same procedures and requirements applicable to other bidders. In addition, the corporation may negotiate and complete purchases and leases of parcels purchased at tax sales by counties and cities, subject to the same procedures and requirements applicable to other governmental entities. Present law authorizes the corporation to provide written notice to the clerk and master in advance of a delinquent property tax sale auction held that it wishes to enter the minimum bid for cash for any parcel advertised for sale in such auction, and such minimum bid preempts all other bids for the parcel, and the local land bank must be the prevailing bidder. If there are no other bidders on a parcel, then such minimum bid must be accepted for no cash, and the local land bank must be the prevailing bidder and take title to the parcel in the same manner as a municipality bidding the minimum bid. This bill deletes these provisions. Present law provides that commencing upon the date of transfer of any real property from a land bank to a taxable person or entity, if approved by local government, then the land bank is entitled to receive payments from the local government equal to 50 percent of real property taxes collected by the local government for a period of five years. Present law provides that the corporation has the power to pay any unpaid taxes due and owing by the owner of record of the real property, or make any government mandated improvements to the property, in exchange for the deed of real property to the corporation. This bill provides that the corporation has the power to pay any unpaid taxes due and owing by the owner of record of the real property, or make any government mandated improvements to the property, without having to exchange the deed of real property with the corporation. SALE OF PROPERTY – POLITICAL SUBDIVISION AS PURCHASER Present law provides that a county, city, town, taxing district or other municipal corporation in Tennessee is authorized to bid on property sold for nonpayment of taxes or assessments levied against the property, or to enforce the lien of taxes or assessments levied against such property, upon which property such entities may have a lien for taxes or assessments, and to buy at such sale. Such entities are authorized to bid excess amounts authorized by the county legislative body, or the legislative council or other governing bodies and to execute such notes for any part of the purchase price of such property as may be authorized by the county legislative body, or by the legislative council or other governing bodies. Present law provides that if at any sale of property for taxes or assessments levied against the property, or for the enforcement of the lien of such taxes or other assessments, any county, city, town, taxing district or other municipal corporation is the successful bidder and become the purchaser of such property at any such sale, then it is expressly authorized to take credit on any note or other evidence of indebtedness executed as all or part of the purchase price of such property for any taxes or assessments against the property, owed to such entity. Such entity is exempted from furnishing any security for payment of any such notes or other evidence of indebtedness for all or any part of the purchase price of any such property. Any county, city, town, taxing district, or other municipal corporation, having become a purchaser at a tax sale, or having otherwise acquired real estate, may fully discharge the lien or liens of delinquent taxes of the state that have priority or are superior to its lien for taxes, by paying the clerk and master or clerk conducting such sale. Present law authorizes the municipality to, upon determining it impracticable to sell the property for the full amount of the taxes, penalty, cost and interest, sell the property for less than this amount. This does not apply in any county except for Davidson County, Shelby County. The municipality may decide to retain ownership and possession of such property. Present law provides that upon the purchase of land by a municipality or by a county at a delinquent tax sale, after the period of redemption has lapsed, when both municipal and county taxes are delinquent: (1) The municipality may sell the property for less than this amount; (2) Any resulting revenue from such tax sale must be apportioned to the municipality and county pro rata based on the amount of delinquent taxes; and (3) The county or municipality may decide to retain ownership and possession of such property. The county or municipality wishing to retain the property must pay to the other governmental entity its pro rata share of the joint bid amount at the tax sale. This bill deletes all the present law above and, instead, provides the following: (1) The priorities of a taxing entity purchasing a parcel at a tax sale pursuant to the law regarding the sale of land relevant to property taxes tax liens must be to either return the parcel to the tax rolls or put the parcel to a use benefitting the public within a reasonably prompt period after purchasing the parcel; (2) If no qualified newspaper is published in the county, then any notice required may be posted on a website maintained by the taxing entity or the clerk of the court where the tax proceeding is pending. If no website is maintained by the taxing entity or clerk, the notice must be posted at the courthouse or other public building where such notices are frequently posted. The court in which the tax proceeding was filed may establish additional advertising requirements; and (3) If the bid of a purchaser from the taxing entity of a parcel purchased by the taxing entity at a tax sale which parcel is subject to a redemption period is greater than the proceeds of a subsequently approved redemption, the purchaser must bear the loss. EXEMPTION FROM TAXATION Present law provides that when land is purchased at a tax sale by the state, by a county, or by a municipality of the state or by a county and a municipality, as tenants in common, and that entity goes into or takes actual possession of such land, the land must be exempt from taxation. Present law provides that when the state, a county or a municipality, or any or all of them, has recovered from the sale or rental of any property purchased by them, or any one, or any combination of them, moneys sufficient to pay the taxes for which the property was sold, it is the duty of the officers of such entity to report the recovery to the assessors of the county and municipality for assessment. Present law authorizes the county, and the municipality, or any or all of the officers who have an interest in the property, to convey the property to any other governmental entity meeting the conditions specified below. In order to receive property, a governmental entity must certify to such officers that the property is to be used for purposes that would make the property subject to condemnation by the governmental entity under its powers of eminent domain. The proper officers of the municipality or county may convey property permitted to be used for residential purposes to a private nonprofit entity that meets all the following conditions: (1) The entity is certified as a tax exempt entity under the Internal Revenue Code; (2) The entity is chartered to construct or to restore residential dwellings for the purpose of creating affordable housing for the disadvantaged and needy, and the property conveyed to the entity is used for that purpose; and (3) The property, once constructed or restored, is conveyed for use as an owner-occupied residence. In Shelby County present law authorizes the proper officers of the municipality or county to convey property purchased at a tax sale to the agency or commission of such municipality or county for redevelopment of properties certified under existing law, for those uses authorized by existing law, as amended by the Community Redevelopment Act of 1998. Additionally, in Shelby County, the governing body of the municipality or county may convey property to a nonprofit community development corporation for where use by the nonprofit community development corporation is deemed by the governing body of the municipality or county to inure to the benefit of the area the recipient nonprofit community development corporation is chartered or authorized to serve. In Shelby County, the proper officers of the municipality or county may convey properties with road frontage no greater than 24 feet acquired in tax sales to adjoining property owners. Present law authorizes the proper officers of the municipality or county to convey real property suitable for community gardening to a private nonprofit entity that meets all the following conditions: (1) The entity is certified as a tax exempt entity under the Internal Revenue Code; (2) The entity is qualified to operate and maintain a community garden; and (3) Any interest in or use of real property conveyed must revert to the municipality or county if the entity ceases to operate and maintain a community garden on the property. This bill deletes the above provisions regarding exemption from taxation on September 1, 2024. SATISFACTION OF DELINQUENCY AND REMOVAL FROM TAX ROLLS Whenever any property is sold at a tax sale and is purchased by the state, by a county, by a municipality, or by a county and municipality, this bill requires the officers of the state, or the county, or the municipality, or of county and municipality, purchasing the property, to notify the county trustee and the collector of any municipal taxes that are a lien upon the property, when actual possession has been taken of such lands, and the county trustee and the collector of municipal taxes are then authorized and directed to note the payment of the taxes, for which the sale was held upon the tax rolls. If actual possession is not taken by such entity, then the lands must not be removed from the tax rolls, nor must the lands be removed from the tax rolls, if the owner or former tenant is permitted to remain in possession of the property without the payment of rent to the state, county or municipality or county and municipality. This bill deletes these provisions on September 1, 2024. SALE OF LAND – COUNTY AS PURCHASER Present law provides that it is the duty of the county mayor of each county to take charge of all the lands bought in by the county at such delinquent tax sales. During the period when redemption of such tract of land can be made, the land must be (i) held and put only to a use that will not result in a waste of the land or (ii) sold to a third party, subject to the right of redemption. This bill adds to the present law by requiring the county mayor to cause a certified copy of all orders confirming the sale of a parcel to the county pursuant to existing law to be recorded in the office of the register of deeds of the county. This bill revises the present law by no longer requiring the land to be (i) held and put only to a use that will not result in a waste of the land or (ii) sold to a third party during the period when redemption of such tract of land can be made. Present law provides that after the period of redemption has elapsed, it is the duty of the county mayor to arrange for the disposition of every tract of such land as expeditiously and advantageously as possible unless parcels acquired by the county are identified by the county mayor, or the mayor's design as being in an area or zoning classification that would make the accumulation of larger areas advantageous to the parcels' reuse and redevelopment. The mayor may hold those properties until a sufficient number of parcels or area has been acquired to improve the parcels' marketability and redevelopment profile. In no event must this accumulation result in property being held without being marketed for more than five years. This bill deletes these provisions. Present law requires a committee of four members to be elected by the county legislative body, from the county legislative body, who, together with the county mayor, must place a fair price on each tract of land. Such committee may authorize the sale of any tract of land upon such terms as will secure the highest and best sale price, but the credit extended must not exceed three years and a lien must be retained to secure purchase price. This bill deletes these provisions. This bill, instead, authorizes the county legislative body may adopt regulations concerning sales of parcels purchased by the county at a delinquent tax sale. The regulations must be designed to promote a fair, effective, competitive, and transparent method of disposing of the parcels so as to attain the highest bid for each parcel. Present law prohibits a tract of land from being sold for an amount less than the total amount of the taxes, penalty, cost and interest, unless the legislative body, upon application, determines that it is impossible to sell the tract of land for this amount, and grants permission to offer the land for sale at some amount to be fixed by such legislative body. Interest must be calculated on the full amount of the taxes, penalty, cost and interest from the time of the acquisition of the land by the county until the sale thereof. This bill deletes these provisions and instead, requires each parcel to be offered for sale with no minimum bid or approval by the county legislative body required, unless otherwise required by the regulations adopted by the county legislative body. This bill authorizes the county mayor to solicit offers for one or more individual parcels or for all parcels on a list prepared pursuant to existing law. Any solicitation of offers must contain a statement as to how and where offers may be filed, and must be published in a newspaper of general circulation in the county. The county is immune from liability for all dues, fees, and assessments secured by a lien upon the parcel purchased by the county at a delinquent tax sale if (i) offers are solicited for the parcel, (ii) s minimum amount is not established for a sale of the parcel; and (iii) an offer is not received within 30 days of the publication of the solicitation in a newspaper of general circulation in the county. Present law provides that whenever the sale of a tract of land is arranged by the county mayor, the deed must not be executed and the sale must not become final until 10 days after the publication in a newspaper published in the county of a notice of the proposed sale. If anyone, during such 10 days, increases the offer made for the land by 10 percent or more, the party making the first offer must be notified and a day fixed when both parties must appear and make offers. The tract of land must be sold to the party making the highest and best offer. This bill adds to the present law by clarifying that the county mayor must give notice to those persons filing offers to appear at a certain time, date, and location and must post the notice at a place available to the general public. At such time, date, and location, the county mayor or the county mayor's designee must conduct an auction of the parcel with the starting bid being the highest written offer received prior to the auction. All persons are eligible to offer bids at the auction. . If no raise offer is timely filed, the original bidder is the successful bidder. This bill authorizes the county mayor to approve the sale by internet sale of parcels purchased by the county at a delinquent tax sale. This bills requirements after a written offer is made may be waived by the county mayor as to parcels offered for sale by internet sale. The highest bidder at such internet auction is the successful bidder. This bill requires the proceeds derived from retentions or conveyances of parcels purchased by the county at a delinquent tax sale to be applied in the following order: (1) First, proceeds must be applied to reimburse the taxing entity for amounts paid by the taxing entity for the purchase of the parcel in the tax proceeding or which remain owing by the taxing entity; (2) Any proceeds remaining after the application of proceeds provided by (1) must be applied first to unpaid attorney fees allowed in the tax proceeding, then to other unpaid court costs, and then divided on a pro rata basis based upon the taxes levied against the parcel by the county and any other taxing entity which has filed a proceeding; (3) Any proceeds remaining after the application of proceeds provided by (1) and (2) must be applied to pay other taxes and accrued interest, penalties, and court costs, owed to the county and any other taxing entity on a pro rata basis, based upon the amounts of taxes owing each; and (4) Any proceeds remaining after the application of proceeds provided by (1)-(3) inure to the benefit of the county. This bill requires the parcel to be released from all taxes, penalties, interest, and court costs owing all tax entities, up to the date of the conveyance subject only to any current year taxes that may not have been paid pursuant to this bill. Any conveyance or retention of a parcel that occurs before the expiration of the redemption period remains subject to the right of redemption. A conveyance or retention of a parcel does not affect the redemption period applicable to the parcel. This bill provides that the county mayor is not required to seek approval of the county legislative body to supervise the sale and conveyance of each parcel unless (i) otherwise required by the regulations adopted by the county legislative body, or (ii) the county legislative body has determined to retain or convey the parcel pursuant to this bill. Present law authorizes the county to, upon a majority vote of its legislative body determining it in the best interests of the county to use the property for a public purpose, decide to retain ownership and possession of such property. This bill adds to the present law by requiring a document evidencing the determination of the county legislative body to retain ownership of a parcel to be recorded in the office of the register of deeds. The county may retain ownership of the parcel, or it may, subject to such terms as may be agreed upon, transfer ownership of the parcel to the following: (1) A governmental entity; or (2) A nonprofit entity; provided, that the parcel is transferred in accordance with this bill. To be eligible to receive a parcel pursuant to (2) above, this bill requires a nonprofit entity to comply with the following requirements: (1) The entity must be exempt from federal income taxation under the Internal Revenue Code; (2) The entity must agree that the conveyed parcel must be used by the entity for at least a reasonable period for the purposes for which the entity was chartered; and (3) The entity is chartered to: (i) construct or to restore residential dwellings for the purpose of creating affordable and habitable housing for the disadvantaged and needy citizens of the community; (ii) construct or to restore historical properties or buildings in the community; (iii) operate or maintain a community garden in the community; or (iv) construct, operate, or maintain a park, memorial, or gathering place in the community, available for use by the general public. Present law requires conveyances of the land to be made without warranties of any sort, and deeds must be executed by the county mayor or other chief fiscal officer of the county. The deed must be prepared by the back-tax attorney as a part of the duties for which the attorney is compensated, and no additional compensation is allowed. This bill revises the present law and, instead, requires deeds to be executed by the county mayor only. This bill adds to the present law by providing that he execution of a deed constitutes a certification by the county that all procedures and rules of the county have been complied with and that all interest of the county in the parcel is being conveyed. The certification must not be overturned absent clear and convincing evidence of a substantial and material violation of a statutorily mandated requirement. If the county mayor determines that there may be a defect in the title to the parcel, then present law authorizes the county mayor to move the court in which the parcel was sold in the tax proceeding to take action to cure the defect. This bill adds to the present law by requiring a diligent effort to give notice of any such motion to be made as to all interested persons as of the date of the filing of the motion. This bill provides that if a municipality does not authorize the county to convey its interest in tax parcels, or if a municipality files a complaint to collect delinquent property taxes owing the municipality separate from the complaint filed by the county to collect delinquent property taxes owing the county, then the municipality's governing body and chief executive officer must dispose of the parcels purchased by the municipality at a delinquent tax sale. In such event, the municipality's legislative body has the powers and duties of the county legislative body as set out in this bill and existing law; its chief executive officer has the powers and duties of the county mayor as set out in this bill and existing law; and the municipality stands in the place and stead of the county. Present law authorizes the county mayor to make an evaluation of the parcel conveyed to a county pursuant to a tax lien sale of property to determine whether the value of the parcel or amount of money the county is likely to receive if the county sold the parcel exceeds the financial obligations or environmental risks associated with the parcel. If the county mayor determines that such financial obligations or environmental risks exceed the value of the parcel, the county legislative body may adopt a resolution, by a 2/3 vote, concurring in the county mayor's determination and directing the county mayor to request relief from the court in which the parcel was sold. If the court finds that the motion should be granted, then the court may rescind its prior order. In the event the prior order is rescinded, title to the parcel must be deemed to have remained in that state which existed as of the date of entry of the prior order confirming the sale. The court has broad discretion to ensure that this does not result for any period of time in the creation of a parcel for which no person or entity has responsibility. The court may then appoint a special master and direct the special master to conduct a second sale of the parcel upon such terms and conditions as may be ordered by the court. This bill adds to the present law by requiring such relief to be sought by motion pursuant to the Tennessee Rules of Civil Procedure filed within 120 days after the entry of the order confirming the sale. This bill also clarifies that these provisions apply to the risks of an individual parcel only and does not apply to the aggregated risks of all or multiple parcels bid in to the county. Present law authorizes, in the event no person presents a bid at the second sale of the parcel, the court to thereafter approve a negotiated sale of the parcel upon such terms and conditions as may be ordered by the court or such other relief as the court may order. This is applicable to the financial obligations or environmental risks of an individual parcel only and must not be applicable to the aggregated financial obligations or environmental risks of all or multiple parcels bid in to the county. This bill adds to the present law by also authorizing the court to approve a negotiated sale of the parcel upon such terms and conditions as may be ordered by the court or such other relief as the court may order as an alternative to ordering a second sale. This bill also authorizes the court to allow an additional fee to the delinquent tax attorney for services rendered in regard to a negotiated sale of a parcel as provided in the law regarding property taxes. LISTING OF PARCELS Present law requires the county mayor to cause to be prepared and maintained a listing of all parcels owned by the county acquired pursuant to a tax lien sale of property. Starting on September 1, 2024, this bill adds to the present law by requiring the assessor of property to assist the county mayor. Present law also requires the chief executive officer of a municipality to cause to be prepared and maintained a listing of all parcels owned by the municipality acquired pursuant to a tax lien sale of property. However, that the listing may omit any property that is required to be listed by a county by the county mayor. The listings must be prepared no later than July 1, 2018. The listings must be published in a newspaper of general circulation in the county or posted on the local government website with a notice of the posting published in a newspaper of general circulation in the county. Starting on September 1, 2024, this bill changes the present law by, instead, requiring, the listings to be prepared annually by July 1. Present law authorizes each list or notice published to contain a solicitation for offers to purchase the parcels listed and a statement as to how and where such offers may be filed. Starting on September 1, 2024, this bill changes the present law by requiring, instead of authorizing, each list or notice published to contain a solicitation for offers to purchase the parcels listed and a statement as to how and where such offers may be filed. SALE OF LAND GENERALLY Present law requires the court to order a sale of the land for cash, certified funds, cashier's check, money order, or automated clearing house transfer, as applicable. All sales are subject to the equity of redemption. Such sale may be conducted electronically in lieu of public outcry. At all sales, the clerk of the court, acting for a tax entity or entities prosecuting the suit, must bid the debt ascertained to be due for taxes, interest, penalties, and the costs and fees incident to the collection thereof, where no other bidder offers the same or larger bid. However, when the legislative body of a tax entity determines that the environmental risks or financial liabilities associated with the property are such that it is not in the best interests of the tax entity for a minimum bid to be offered at the tax sale, the clerk must not offer a bid on the property at the tax sale. Present law requires, for every county except Pickett County, Trousdale County, Clay County, Jackson County, Macon County, Smith County, Scott County, Wilson County, and Sumner County, up to 10 percent of the sale proceeds to be applied first to payment of any unpaid balance of compensation due the prosecuting attorney. Second, the proceeds of the sale must be applied to the costs of the suits. Third, the remainder must be applied to the state first, county second, and municipality third, the amount due each to be ascertained by a decree of the court. This bill deletes these provisions. Present law also requires, for every county except Pickett County, Trousdale County, Clay County, Jackson County, Macon County, Smith County, Scott County, Wilson County, and Sumner County, the proceeds from such sale to be applied first to the payment of the 10 percent penalty allowed as compensation for prosecuting the suits, second to the costs, and third the remainder to be applied to the state first, county second, and the municipality third, the amount due each to be ascertained by a decree of the court. This bill deletes this provision. Starting on September 1, 2024, this bill requires the tax sale proceeds to be distributed according to the following priorities: (1) Amounts owing the delinquent tax attorneys prosecuting the cause; then (2) The costs of the proceeding exceeding the attorneys' fees; then (3) Amounts owing the taxing entities which are parties in the cause; then (4) 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 notices sent them pursuant to existing law and for which no action has been filed pursuant to the law regarding property taxes, divided prorated upon the amount of the base taxes due each; then (5) Any other property taxes and expenses owing any taxing entity secured by a tax lien on the parcel; then (6) Any remaining proceeds must be distributed in accordance with the law regarding a motion setting for claim to excess sale proceeds. Starting on September 1, 2024, this bill provides that if there are not sufficient funds to pay all of the amounts stated in (1)-(3) above, then the tax liens of the taxing entities securing such amounts must lapse upon expiration of the redemption period, it being the intent of the general assembly that a parcel sold at a tax sale be conveyed free of any remaining tax liens other than taxes levied for the current year. However, a taxing entity retains any personal right of action it may have against prior owners of the parcel. If the tax sale is subsequently invalidated or declared void, then the lapsed tax liens must be reinstated retroactively. Starting on September 1, 2024, if a taxing entity purchases a parcel pursuant to this bill, this bill requires the taxing entity to pay to the clerk all amounts owing as court costs, including the amount owing the attorney prosecuting the case, within 60 days after the order confirming the sale becomes final. The taxing entity may by motion request the court for an extension of time in which to pay such amount. The court may grant such extension for such period as the court determines proper not to exceed three years and may award interest to accrue during such extension at a rate determined by the court. In making such determinations, the court must consider the financial condition of the taxing entity. If the taxing entity determines to retain the parcel, it must within 60 days of making such determination, pay to the clerk all remaining amounts owing on the parcel. If the parcel is subsequently transferred pursuant to the law regarding the sale of land where a county is the purchaser for an amount greater than the court cost paid pursuant to bill, such excess must be distributed pursuant to this bill to the extent funds are available. Any remaining amounts owing on the parcel must be dismissed by the court and the liens securing the same must terminate. Starting on September 1, 2024, this bill authorizes the court to order the sale of all or a portion of the taxable personal property constituting a parcel secured by a tax lien. Such sale must be made according to such procedures as may be established by the court. Upon a tax proceeding being filed to enforce a tax lien against real or personal property, any requirement mandating the confidentiality of records pertaining to the parcel terminates. TAXES ON WHICH LIEN BASED This bill provides that each person owning an interest in a corporate entity or similar organization and that is, or is stated in the records of the office of secretary of state to be, an inactive, dissolved, revoked, or otherwise terminated entity, is jointly and severally liable with the entity, each other, and such other persons as may be liable, for all unpaid property taxes levied against parcels assessed to the entity, and such interest, attorney fees, and other court costs as may accrue on the same. INDEMNITY BOND OF PLAINTIFF Present law prohibits a sheriff or other officer from being required to levy an execution on any property the title of which is disputed, or to sell the same after levy, unless the plaintiff will first give bond and security to such officer, to indemnify the sheriff or other officer against all damages and costs in consequence of the levy or sale. This bill adds that the bond or security is not required if the execution is issued in a proceeding to collect delinquent property taxes. ADVANCE FEES ON PROCESS FROM OTHER COUNTIES Present law prohibits a sheriff or constable from being compelled to execute any subpoena or original summons in civil cases coming from any county other than the one in which such sheriff or constable is an officer, unless the fees allowed such sheriff or constable by law for the service of such process, if demanded, are paid in advance. This bill provides that this provision does not apply to summons, executions, or other orders of a court rendered in a proceeding to collect delinquent property taxes. SEARCH DURING EXECUTION This bill requires, in all proceedings for the collection of delinquent property taxes, an officer serving an execution issued in such proceeding to conduct a search of the person of the defendant and such items and areas under the control of the defendant and to seize such cash, property, and other assets belonging to the defendant, as is necessary to satisfy the execution and such additional fees as may be incurred by the officer. If the defendant objects to the search, then the defendant must reduce the defendant's objections to writing and give them to the officer. Then the defendant must be escorted by the officer to appear before a judicial commissioner or other official authorized to issue warrants, to state the defendant's grounds for the objection. The commissioner must determine the validity of such grounds and either grant or refuse to allow the search. The commissioner must retain the written objections of the defendant and the commissioner's written decision and deliver both to the clerk of the court from which the execution issued. This bill provides that the exemptions set out in the law regarding execution for criminal cases, and homestead exemptions and such other laws that provide that exemptions do not apply to sales of property of the defendant in regard to sales for taxes include executions issued in proceedings for the collection of delinquent property taxes. DILIGENT EFFORT TO GIVE ACTUAL NOTICE As used in the present law regarding property taxes, "diligent effort to give actual notice of the proceedings" means a reasonable effort to give notice that is reasonably calculated, under all the circumstances and conditions, to apprise interested persons of the pendency of the proceedings in time to afford them an opportunity to prevent the loss of their interest in the parcel. Such effort must be such as one desirous of actually informing the persons might reasonably adopt to accomplish it. Such effort does not, however, require that an interested person receive actual notice. Nor does it require the plaintiff to search records or sources of information in addition to that information available in the specific offices listed in existing law. This bill adds to the definition of "diligent effort to give actual notice of the proceedings" by clarifying that the effort does not require the tax entity or delinquent tax attorney to obtain discovery. NATURE OF PROCEEDINGS This bill provides the following: (1) The law regarding adjustments and refunds for collection and enforcement relevant to taxes and licenses does not apply to property taxes; (2) The law regarding judicial or trusts sales does not apply to property tax proceedings, tax liens, or the enforcement of such tax liens; (3) An interested person must not file as a defense, a counterclaim, a cross claim or for another purpose, a defense or cause of action not directly related to the tax proceeding, or a claim of a set off; and (4) The failure of a defendant or interested person in a tax proceeding to have exhausted all administrative remedies bars the defendant from contesting an issue in the tax proceeding that could have been decided in such manner. COLLECTION BY GARNISHMENT Present law authorizes the county trustee to proceed against a taxpayer who is delinquent in the payment of tangible personal property taxes by retaining an agent to collect such delinquent tangible personal property taxes, plus interest authorized by law, reasonable costs, and legal fees, provided that the collection activities are in compliance with present law. If a collection agent is retained, then the county trustee must utilize the bidding procedures applicable to the county to select and retain the agent and must notify the county legislative body of such action. The agent's collection fee must not exceed 30 percent of tangible personal property taxes due, and the fee must be added to the total amount of delinquent tangible personal property taxes owed, plus interest authorized by law, reasonable costs, and legal fees. Present law prohibits a contract or other arrangement entered into to retain a collection agent from providing that the compensation paid to the agent is conditioned on increasing tangible personal property tax collections in the county involved. A contract found to contain such language is void and unenforceable. An agent must not communicate with the delinquent taxpayer or proceed upon the delinquent taxpayer's property unless authorization to take such action is provided in the contract. The agent must not institute or undertake a collection or related activity in violation of the Tennessee Collection Service Act. An agent retained must be licensed and in good standing with the Tennessee collection service board. Present law requires all foreclosures, seizures, litigation, or other judicial or non-judicial proceedings to enforce a tax lien or any similar rights to collect delinquent tangible personal property taxes, plus interest authorized by law, reasonable costs, and legal fees, to be in the name of the taxing jurisdiction as the plaintiff or claimant. An agent who also performs audit procedures must not be retained to collect delinquent tangible personal property taxes. This bill clarifies that the above provisions and the contract authorized in the above provisions does not repeal or modify a provision of the law regarding property taxes. PROCEDURE FOR REDEMPTION OF PROPERTY Present law requires, in any motion to enforce a right of redemption brought by a transferee against a tax sale purchaser or other interested party, the tax sale purchaser or other interested party in whom the right of redemption originally vested to be served with a copy of the motion to redeem. This bill replaces this provision and, instead, requires in any motion to enforce a right of redemption brought by a transferee against a tax sale purchaser or other interested party, the movant to serve a copy of the motion to redeem upon the tax sale purchaser, each grantee of the tax sale purchaser's interest in the parcel, and all other interested persons as of the date the motion to redeem is filed, in the manner set forth in the Tennessee Rules of Civil Procedure for pleadings not asserting new or additional claims for relief. Present law requires, upon the filing of the motion to redeem and the payment of the required amount, the clerk to within 10 days send a notice of the filing of the redemption motion to the purchaser and all persons entitled to redeem the parcel. The notice of redemption must state the amount paid at the time of the filing of the motion and refer the persons to the existing law. This bill changes the present law by requiring the clerk to within 10 days send a notice of the filing of the redemption motion to each grantee of the tax sale purchaser's interest who has filed notice of the purchase and a mailing address with the clerk, instead of to all person entitled to redeem the parcel. This bill also requires the notice to be forwarded to the last known address of the addressee. Present law authorizes the purchaser to within 30 days after the mailing of the notice of redemption, file a response seeking additional funds to be paid by the proposed redeemer to compensate the purchaser for amounts expended by the purchaser for the purposes set out in existing law. The response must specifically set out the basis for each category of additional funds claimed. The response may also allege that the motion to redeem was not properly or timely filed. If no response is timely filed, the court must determine whether the redemption has been properly made, and if so, must cause an order to be entered requiring the proposed redeemer to pay additional interest at the rate set forth in existing law, accruing from the date the motion to redeem was filed until the date of such payment. This bill changes the present law by requiring, instead, if no response is timely filed, the court to determine whether the redemption has been properly made, and if so, must cause an order to be entered declaring the parcel redeemed. Present law provides that additional sums to be paid by the proposed redeemer at the demand of the purchaser include additional interest at the rate set out in existing law, accruing from the date the motion to redeem was filed until the date the purchaser's response was filed. If the court determines that the purchaser has not delayed consideration of the motion to redeem and that any response filed by the purchaser for additional funds was based on a reasonable expectation that the expenditures of the purchaser were reimbursable, then the court may require the proposed redeemer to also pay additional interest at the same rate, accruing from the date the purchaser's response was filed until the date of such payment. This bill adds to the present law by providing that if the court determines that disposition of a redemption motion has been unreasonably delayed, the court may decline or limit an award of additional interest under this present law. NOTICE OF TAXPAYER SUIT Present law provides that the return of the receipt signed by the defendant, spouse, or other person deemed appropriate to receive summons or notice as provided for in the Rules of Civil Procedure, or its return marked "refused", "unclaimed", or other similar notation, as evidenced by appropriate notation of such fact by the postal authorities, and filed as a part of the record by the clerk is evidence of actual notice and must be grounds for a default judgment. Process and notices delivered by registered or certified mail or by an alternative delivery service, with a return receipt, to an interested party's registered agent at the agent's address or to the address of the interested party, each as shown on the corporate records of a state secretary of state or other officer responsible for maintaining such records, must be sufficient to bind the interested party as to notices and service of process. This bill adds to the present law by providing that as used in the above provisions, "appropriate notation of such fact by postal authorities" includes tracking records located on the website of the delivery service. If a copy of the tracking records is filed with the clerk confirming the delivery, then the filing of the return receipt is not required. ON APRIL 22, 2024, THE HOUSE ADOPTED AMENDMENTS #1 AND #2 AND PASSED HOUSE BILL 2624, AS AMENDED. AMENDMENT #1 makes the following changes: (1) Revises the provision in the bill that deletes the present law (i) authorizing the corporation to provide written notice to the clerk and master in advance of a delinquent property tax sale auction held that it wishes to enter the minimum bid for cash for any parcel advertised for sale in such auction, and such minimum bid preempts all other bids for the parcel, and the local land bank must be the prevailing bidder; and (ii) providing that if there are no other bidders on a parcel, then such minimum bid must be accepted for no cash, and the local land bank must be the prevailing bidder and take title to the parcel in the same manner as a municipality bidding the minimum by revising that present law instead of deleting it. This amendment revises (ii) and, instead, provides that if a party other than the local land bank submits a bid for an amount greater than the minimum bid submitted by the local land bank pursuant to (i), the high bidder is the prevailing bidder, and the local land bank may, within two business days from the close of the tax sale auction, submit and deposit with the clerk of the court a revised bid for the parcel in an amount equal to, or greater than, the bid amount submitted by the high bidder. If the local land bank submits an equal or higher bid for the parcel within two business days of the close of the tax sale auction, then the local land bank is the prevailing bidder. However, this does not alter or modify the redemptive rights of any party. This amendment also provides that (i) and (ii) above only applies in Shelby County; (2) Deletes the provision in the bill that deletes the present law providing that commencing upon the date of transfer of any real property from a land bank to a taxable person or entity, if approved by local government, then the land bank is entitled to receive payments from the local government equal to 50 percent of real property taxes collected by the local government for a period of five years; (3) Deletes the provision in the bill providing that the county is immune from liability for all dues, fees, and assessments secured by a lien upon the parcel purchased by the county at a delinquent tax sale if (i) offers are solicited for the parcel; (ii) a minimum amount is not established for a sale of the parcel; and (iii) an offer is not received within 30 days of the publication of the solicitation in a newspaper of general circulation in the county; (4) Revises the provision in the bill providing that as an alternative to ordering a second sale or if a person does not present a bid at the second sale of the parcel, the court may thereafter approve a negotiated sale of the parcel upon such terms and conditions as may be ordered by the court or such other relief as the court may order, including, but not limited to, the conveyance to a nongovernmental entity claiming contractual rights to dues or assessments by no longer authorizing such other relief as the court may order, including, but not limited to, the conveyance to a nongovernmental entity claiming contractual rights to dues or assessments; (5) Deletes the provision in the bill clarifying that the Neighborhood Preservation Act does not apply to (i) liens securing the payment of property taxes, interest thereon, and court costs in proceedings to enforce the lien; (ii) tax sales conducted pursuant to the law regarding property taxes; (iii) parcels sold or ordered by a court to be sold at tax sales; or (iv) a requirement or provision in the law relevant to taxes and licenses; (6) Deletes the provision in the bill providing that a receiver's lien created under the "Neighborhood Preservation Act" is secondary to a first lien securing property taxes; (7) Deletes the provision in the bill that revises the present law providing that the filing of a petition for a judgment in rem acts as a bar of any transfer of title of the subject parcel or of any interests pertaining to such subject parcel, including transfers by tax sale or other foreclosure, transfers or creation of lien interests in the subject parcel, or otherwise, from the date of the filing until the petition is dismissed or until specific orders of the court authorizing a transfer of title, if the petition has attached a certificate of public nuisance by removing a tax sale from the list of transfers of titles; (8) Deletes the provision in the bill providing that the receiver's lien is a first lien on the subject parcel, which is superior to all prior and subsequent liens or other encumbrances associated with the subject parcel with the exception of liens securing the payment of property taxes as set out in the law regarding property taxes; (9) Deletes the provision in the bill that deletes the present law providing that the county trustee is allowed a credit pursuant to existing law for any local taxes and assessments that are not collected as a result of the failure of the receiver's lien sale to receive a cash payment for the minimum bid; and (10) Deletes the provision in the bill providing that the sale procedures set out in the "Neighborhood Preservation Act" do not apply to tax sales conducted pursuant to the law regarding property taxes. AMENDMENT #2 revises the effective date provision such that, for the following provisions, the effective date is September 1, 2024: (1) If the receiver's lien is not satisfied by the owner, requires the court to direct the receiver to offer the subject parcel for sale in accordance with the following: sale procedures set out in the Neighborhood Preservation Act do not apply to tax sales conducted pursuant to state property tax law; (2) Establishes that the Tennessee Local Land Bank Program does not apply to (i) liens securing the payment of property taxes, interest thereon, and court costs in proceedings to enforce the lien; (ii) tax sales conducted pursuant to state property tax law; (iii) parcels sold or ordered by a court to be sold at tax sales; or (iv) a requirement or provision set out in state law relative to taxes and licenses; (3) Establishes that a corporation created pursuant to the Tennessee Local Land Bank Program to operate a land bank has the power, as limited by the legislative body of the crating local government(s), to bid at a tax sale conducted pursuant to state property tax law, subject to the same procedures and requirements applicable to other bidders. In addition, the corporation may negotiate and complete purchases and leases of parcels purchased at tax sales by counties and cities, subject to the same procedures and requirements applicable to other governmental entities; (4) Removes the following present law provisions: (A) The corporation may provide written notice to the clerk and master in advance of any delinquent property tax sale auction that it wishes to enter the minimum bid for cash for any parcel advertised for sale in such auction, and such minimum bid must preempt all other bids for said parcel, and the local land bank shall be the prevailing bidder; (B) If there are no other bidders on a parcel under (A), such minimum bid must be accepted for no cash, and the local land bank must be the prevailing bidder and take title to said parcel in the same manner as a municipality bidding the minimum bid; and (C) Commencing upon the date of transfer of any real property from a land bank to a taxable person or entity, if approved by local government, the land bank must be entitled to receive payments from the local government equal to 50 percent of real property taxes collected by the local government for a period of five years; and (5) Establishes that the corporation has the power to pay any unpaid taxes due and owing by the owner of record of the real property, or make any government mandated improvements to the property.

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Sponsor

Swann, Art

Details

Session

113th General Assembly

Introduced

January 31, 2024

Last Action

May 28, 2024

Comp. became Pub. Ch. 967

Subjects

TaxesTaxes, Ad ValoremTaxes, Real PropertyTaxes, Personal PropertyLocal Government, GeneralCounty Officers

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