Bill > SB1079

This bill amends Tennessee law regarding how escrow funds are handled for condominium projects, specifically focusing on deposits made by potential unit buyers to declarants (the original property developers). Under the new provisions, the first 10% of a unit's purchase price must be placed in an escrow account with specific protections, and the declarant can only access these funds if they provide either a surety bond or an irrevocable letter of credit that guarantees the buyer's potential financial risk. Deposits can be used for actual construction costs like materials, labor, permits, and professional fees, but cannot be used for sales commissions or advertising. The bill requires any contract allowing such fund usage to include a specific bold-faced disclosure to buyers. Additionally, the law clarifies that third-party lenders are not liable for these deposit arrangements unless they take ownership of the project through foreclosure. The bill will take effect on July 1, 2025, and will apply to contracts entered into or amended on or after that date, providing new protections for consumers making deposits on condominium units and offering more transparent guidelines for developers about how they can utilize those funds during the construction process.

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https://wapp.capitol.tn.gov/apps/Billinfo/default.aspx?BillNumber=SB1079&ga=114