TennesseeProperty owners can back improvement debt with lenders' written consent
Property owners can agree to back agency debt for area improvements with existing lenders' written consent, and recorded agreements give payment claims the same priority as property taxes.
What it does
Property owners can agree to back debt for area improvements with written consent from each existing recorded property lender. Agencies cannot require these agreements before approving a plan.
Recorded agreements place a claim on the property that ranks equally with property taxes, ahead of mortgages. Future direct payments remain due on schedule after a property-tax foreclosure.
A lender cannot enforce a term requiring early payment solely because an owner enters a taxpayer agreement. This protection also covers other holders of claims against the property.
Argument forOwner-backed agreements could help protect bondholders when tax revenues from an improvement area fall short of the next debt payment.
Argument againstFuture buyers could inherit payment burdens because the claim stays with the property and future payments survive property-tax foreclosure.
More detail
Tax increment agencies, which finance improvements in a plan area, may make agreements with property owners to back agency bonds or lease obligations. Owners must have property in the agency's plan area. A direct payment covers any shortfall between the next agency debt payment for area improvements and available tax revenues generated within that area. Each holder of an existing recorded mortgage or deed of trust securing debt on the property must consent in writing and confirm that the assessment does not trigger a loan default. The agency cannot require an owner to sign an agreement before approving a plan. The law took effect May 1, 2026, and applies to contracts and other agreements entered into, amended, or renewed on or after that date.
The agency must record each agreement in county property records, placing a lien—a legal claim for payment—on the covered property. The claim stays attached to the property when ownership changes. The claim ranks equally with property-tax claims, ahead of existing and later mortgages and other claims. It can be collected like property taxes. Agreements may set late-payment charges and collection rules. By recording day, the agency must notify the county trustee and certify that a third-party bond trustee will administer those rules. After nonpayment, the bond trustee must coordinate enforcement with the county trustee where the law permits. Property-tax foreclosure cannot make direct payments that are not yet due payable early or cancel them. The claim starts when the agreement is recorded and lasts until the amount owed, including interest, penalties, and required costs, is paid.
A lender or other lienholder cannot enforce a contract term demanding early payment solely because the owner enters a taxpayer agreement. It covers mortgages, deeds of trust, and other agreements between property owners and holders of claims against their property. The protection applies when entering the taxpayer agreement is the sole reason for demanding early payment. The protection applies to contracts and other agreements entered into, amended, or renewed on or after May 1, 2026.
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Where it stands
- Introduced
- Passed House
- Passed Senate
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- May 18Pub. Ch. 915Latest
- May 18Effective date(s) 05/01/2026
- May 1Signed by Governor Bill Lee.Became Law
- Apr 21Transmitted to Governor for his action.To Governor
- Apr 20Signed by Senate SpeakerMajor
- Apr 16Signed by H. SpeakerMajor
- Apr 15Enrolled; ready for sig. of H. Speaker.Minor
- Apr 14Senate substituted House Bill for companion Senate Bill.Major
- Vote recorded FLOOR VOTE: Third Consideration 4/14/2026 Passed. Result: pass.Upper
- Apr 14Amendment withdrawn. (Amendment 1 - SA0952)
- Apr 14Passed Senate, Ayes 31, Nays 0, PNV 1Passed Senate
- Apr 6Received from House, Passed on First ConsiderationMinor
- Apr 2H. adopted am. (Amendment 1 - HA0795)Major
- Vote recorded HOUSE CALENDAR & RULES COMMITTEE: H. Placed on Regular Calendar for 4/2/2026 3/26/2026. Result: fail.Lower
- Vote recorded FLOOR VOTE: REGULAR CALENDAR AS AMENDED PASSAGE ON THIRD CONSIDERATION 4/2/2026 Passed. Result: pass.Lower
- Apr 2Passed H., as am., Ayes 86, Nays 0, PNV 7Passed House
- Apr 2Sponsor(s) Added.Minor
- Apr 2Engrossed; ready for transmission to Sen.Minor
- Mar 26H. Placed on Regular Calendar for 4/2/2026
- Mar 25Placed on cal. Calendar & Rules Committee for 3/26/2026
- Mar 24Rec. for pass. if am., ref. to Calendar & Rules CommitteeMinor
- Vote recorded HOUSE STATE & LOCAL GOVERNMENT COMMITTEE: Rec. for pass. if am., ref. to Calendar & Rules Committee 3/24/2026 Passed. Result: pass.Lower
- Mar 18Action def. in State & Local Government Committee to 3/24/2026
- Mar 18Placed on cal. State & Local Government Committee for 3/24/2026
- Mar 11Action def. in State & Local Government Committe to 3/18/2026
- Mar 11Placed on cal. State & Local Government Committee for 3/18/2026
- Mar 4Rec. for pass by s/c ref. to State & Local Government CommitteeMinor
- Vote recorded HOUSE CITIES & COUNTIES SUBCOMMITTEE: Rec. for pass by s/c ref. to State & Local Government Committee 3/4/2026 Passed. Result: pass.Lower
- Mar 4Placed on cal. State & Local Government Committee for 3/11/2026
- Feb 25Placed on s/c cal Cities & Counties Subcommittee for 3/4/2026
- Feb 4P2C, ref. to State & Local Government CommitteeMinor
- Feb 4Assigned to s/c Cities & Counties SubcommitteeMinor
- Feb 2Intro., P1C.Minor
- Jan 22Filed for introductionMinor
- Jan 22Sponsor(s) withdrawn.Introduced
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