Vol. 15, No. 12
August 1998

Recording

- Public Chapter ("PC") 870 allows registers to charge (i) $12.00 instead of $10.00 for each UCC instrument filed or recorded plus $.50 for each attached page in excess of 10, and (ii) an additional $2.00 for each other instrument accepted for recording. The additional fees must be used to purchase computer equipment and software.

- PC 725 requires security agreements and financing statements covering crops to include the USDA, Farm Services Agency, Farm Serial Number.

- PC 673 allocates one and one half cents of each levy of the transfer tax to an "Agricultural Resources Conservation Fund." Money in the fund is to be used to help landowners deal with water quality problems and pollution.

- PC 642 deletes the requirement that UCC instruments filed with the Secretary of State be on 8 1/2" by 11" paper and have three inches of blank space at the bottom.

Eminent Domain

- PC 908 provides that a municipality may not condemn property outside its boundaries for a landfill unless the governing body of the affected area approves the taking by a two-thirds vote.

- PC 670 allows the jury in a suit to condemn a private road to offset incidental benefits against incidental damages but not against the value of the property taken.

Landlord and Tenant

- PC 885 requires a landlord to pay up to $200 of the cost of removing a tenant's personalty from the leased premises when the tenant is evicted by the district attorney for a drug offense or prostitution. (The district attorney is authorized to evict if the landlord fails to do so.)

- PC 703 allows a tenant to be evicted if the tenant knowingly uses the area around the leased premises to commit a drug offense.

Vendor and Purchaser

- PC 727 revises the prescribed disclosure form under the Tennessee Residential Property Disclosure Act. The revised form makes clear that provisions in the sales contract may sup.ersede the form and adds disclosures concerning HVAC systems, leases, and exterior stucco. 

Construction

- PC 706 amends TCA § 56-7-111 to require that insurance companies pay property insurance proceeds to both the owner and the general contractor whenever there is uncompleted construction.

Property Taxes

- PC 683 provides that if a buyer declares to the seller in writing that the buyer will continue a parcel's greenbelt status but does not timely file the form required to do so, the buyer will be solely responsible for all roll-back taxes.

- PC 940 allows petitions for judicial review of decisions of the State Board of Equalization to be filed in the chancery court of Davidson, Washington, Knox, Hamilton, Madison, or Shelby County, whichever is closest to the property at issue. If the property is in Knox, Hamilton, or Shelby County, the petition may also be filed in Davidson County.

- PC 894 requires back tax attorneys to make reasonable searches of the records in the "offices of the assessor of property, trustee, local office where wills are recorded, and register of deeds," and to give notice of tax sales to owners revealed by such searches.

- PC 647 allows taxing authorities to transfer residential property acquired at tax sales to non- profit entities whose mission is to provide affordable housing for the disadvantaged.

- PC 1066 modifies the -rules relating to tax appeals. Among other things, the new law allows lessees who are responsible for taxes to bring complaints before the Board of Equalization.

Uniform Commercial Code

- PC 641 repeals Article 6 of the UCC, the so-called "Bulk Sales Act."

- PC 675 substantially rewrites Article 5 of the UCC, which deals with letters of credit.

The real estate brokerage license of the defendant in Hamilton was revoked by the Tennessee Real Estate Commission.  Nevertheless, the defendant obtained powers of attorney from its clients and continued its business of managing and leasing its clients' vacation homes. The powers of attorney  contained the following provisions:

... My attorney is specifically authorized and directed to make property available to and to rent the Property to third persons and to do all things incident thereto including collecting, accounting for, and making periodic remittances to me for income generated from the use of the Property.

... My attorney in fact, and any successors, shall be compensated for services rendered at a rate equal to forty percent (40%) of the gross receipts that my attorney generates from the use of the Property.

When it learned of the defendant's activities, the Commission sought an injunction. The trial court rejected the defendant's section 62-13-104(2) defense and granted the relief requested. The Court of Appeals affirmed:

The predecessor in title of both the plaintiffs and the defendants in Moore developed a seven lot subdivision in Sequatchie County and conveyed the lots to purchasers. There was no declaration of restrictive covenants, but five of the seven deeds (including the defendants') contained prohibitions against mobile  homes, four contained prohibitions against commercial use, three contained a 1,000 square foot minimum floor area requirement, and one contained a 1,200 square foot minimum floor area requirement.

When the defendants placed a mobile home on their property, the plaintiffs sued for an injunction and damages. The defendants argued that there was no common plan of development and that thus the plaintiffs had no right to proceed. The trial court rejected this argument and held for the plaintiffs. On appeal, the Court of Appeals affirmed:

It is well-settled that property owners may subdivide their property for sale and place restrictions on the use of each parcel sold for the benefit of both themselves and the buyers. See Laughlin v. Wagner, 146 Tenn. 647,653,244 S.W 475,476 (1992); Benton v. Bush, 644 S.W2d 690,691 (Tenn. Ct. App. 1982). One of the most common forms for imposing restrictions on subdivided property is for the property owner to establish a general building plan of improvement covering a tract of land divided into lots. See Arthur v. Lake Tansi Village, Inc., 590 S.W2d 923,928 (Tenn. 1979).

Property owners may establish a subdivision plan in a number of ways.  They may expressly enter into reciprocal covenants promising to insert like restrictive covenants in all deeds conveying property out of the divided tract. See Arthur v. Lake Tansi Village, Inc., 590 S.W2d at 928. They may also establish a general subdivision plan by selling lots while making oral statements inducing buyers to rely that all lots will be sold with the same restrictions. See Lake Tansi Village, Inc., 590 S.W2d at 928. The restrictive language contained in a series of deeds conveying parcels out of a common tract of land may also establish a general subdivision plan. See Ridley v. Haiman, 164 Tenn. 239, 255-57, 47 S.W2d 750, 755 (1932); see also Swanson v. Green, 572 So.2d 1246, 1248 (Ala. 1990).

Where property owners intended to establish a general subdivision plan, the fact that some lots in a subdivision are sold with no restrictions does not invalidate restrictions on the other subdivided lots. See McIntyre v. Baker , 660 N.E.2d 348, 352 (Ind. Ct. App. 1996). A grantor may intend to establish a general subdivision plan even if the restrictions on all the lots are not perfectly identical. See Owenby v. Boring , 38 Tenn. App. 540, 547, 551, 276 S.W2d 757, 760, 762 (1954).

Comment:

* The deed of the defendants in Moore contained a restriction against mobile homes, but the result might well have been the same if it had not. When there is a common plan of development, even a purchaser whose land is not expressly burdened is bound by restrictions of which the purchaser has knowledge. See Land Developers, Inc. v. Maxwell, 537 S.W.2d 904 (Tenn. 1976).

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