TN Underwriting References

Construction Lien/Future Advance

Suggested Pending Disbursement Clause

“Pending disbursement of the full proceeds of the loan secured by the Insured Deed of Trust, this Policy insures only to the extent of the amount actually disbursed, but increases as each disbursement is made in good faith and without knowledge of any defects, liens, or encumbrances on the Title, up to the face amount of the Policy. At the time of each disbursement of the proceeds of the loan, the title must be continued down to that time for defects, liens, or encumbrances on the Title intervening or recorded between Date of Policy and the date of the disbursement.”

Tennessee, under TCA 47-28-103, provides that optional future advances have priority over any intervening encumbrances unless the mortgagee has actual notice of the intervening encumbrance. With that said, I think the down-date requirement in the exception is proper.

Probate & Estates

FAQ 1. What is the title of the person that represents the decedent’s estate i.e. Executor, Administrator, Personal Representative, or something else? Executor and PR are used. a. Is there a different title if the decedent had a Will or didn’t have a Will? Yes-Executor/Executrix if there is a will and PR if there is no will.

2. Can the Executor, the person in question #1, convey all real property of the decedent without also obtaining deeds from the beneficiaries? No, but see below. a. If yes, under what circumstances i.e. power of sale in the Will or is a separate court order required? Only if the PR or Executor is specifically authorized, either by a court order or specific direction in the will.

3. Does your state have shortened probate procedure? No.

4. Does your state have a non-judicial administration? No.

5. In your state, can WFG rely on an affidavit of heirship without more to vest title? No. We use these, but they do not vest title.

6. In your state, will WFG rely on a recorded Will to vest title without a probate? Yes, if it is over 1 year old.

7. Does your state have estate taxes? No.

8. Does your state have inheritance taxes? No. It was abolished on 1/1/2016, but be aware, the liens may still be present for estates where the date of death occurred prior to 2016.

9. What is the Creditor Claims period in your state? 1 year after the death of decedent, except for certain TennCare claims (reimbursement for certain medical expenses for enrollees over age 55).

10. If the personal representative conveys to a BFP and the sale proceeds are paid to the PR, does that release the property from the creditors’ claims? Creditors’ claims are addressed through the administration of the probate estate.

11. What is the most common form of deed used to convey out of an estate i.e. QCD, SWD, WD, other? WD

12. Does your state require a Will to have a specific devise of real property or may real property be devised under the residuary clause in the Will? Property may be devised by the residuary clause.

13. When does title pass after the death of the title holder i.e. on death, when probate is done, or other? The real property of a testate decedent that is in the decedent’s probate estate vests immediately upon death in the specific beneficiaries named in the will, provided that the will is admitted to probate and the will does not contain a provision directing the real property be administered as part of the estate. TCA Section 31-2-103.

14. Does your state recognize tenants by the entirety and JTWRS so that no probate is required upon the death of the first tenant? Yes, TBE is recognized, but JTWROS was abolished in 2017.

• 32-2-11 allows for the admission of a Will to probate for the purpose of establishing title even without a formal grant of letters. 32-2-107 states that the probate of a will is sufficient evidence of the devise of title to real estate. 32-5-109 permits the registration of a certified copy of a probated will to be registered as a muniment of title. The lack of a grant of letters and the issuance of a court order declaring the validity of a will for purposes of determining the disposition of an estate is common with small estates.

Tax Deeds

Tennessee

• Judicial Sale process § 67-5-2501
  • Judicial Notice Requirements
  • Notice by publication is common – so questions about efforts made by assessor & counsel to locate.
  • In fact, many title companies will not write title insurance policies on tax sale property for 10-20 years after sale.
  • Case law: Failure of notice, void judgement. No Statute of limitati

Where court in delinquent tax suit has jurisdiction over subject matter by actual or constructive notice to taxpayer, all questions must be settled in that cause, but notice is essential, and in absence of notice decree is void, and three-year statute of limitations does not apply to a void decree.  Code 1932 §§ 1591, 1609, 1610.  West v. Jackson, 1944, 186 S.W.2d 915, 28 Tenn.App. 102.Taxation   2930Taxation   2936Taxation   3162(2)

• Notice of sale published and to Defs per rules of civ pro.
• Order confirming sale transfers right of possession.
• Decree of confirmation required.
• 1 year right of redemption after sale and confirmation.
• Screwy statute of limitations language. In 67-5-2504

(d)(1) A suit to invalidate any tax title to land shall be commenced within one (1) year from the date the cause of action accrued, which is the date of the entry of the order confirming the tax sale.
(2) The statute of limitations to invalidate the sale of any tax title shall be one (1) year as set forth in subdivision (d)(1), except that it may be extended to one (1) year after the plaintiff discovered or with the exercise of reasonable due diligence should have discovered the existence of such cause of action.
(3) In no event shall any action to invalidate any tax sale title be brought more than three (3) years after the entry of the order confirming the tax sale.

• Odd interpretation – this statute prevents filing Q.T. action for 3 years. And impliedly grants the prior owner a 3 year challenge period. Inman v. Raymer Court of Appeals of Tennessee.May 4, 2004 Not Reported in S.W.3d2004 WL 948386

• So can’t insure for 3 full years after. ??

• • A tax deed is void, where the law authorizing the tax sale, pursuant to which the deed was made, was not strictly followed.  Sheafer v. Mitchell, 1902, 71 S.W. 86, 109 Tenn. 181.Taxation 3072(1)
  • Tax deeds are void where several tracts of land are sold as a whole and not separately;  where the law authorizing such sales is not strictly followed, the proceeding being purely statutory, and where the record offered to support the deed varies materially from its recitals.  Sheafer v. Mitchell, 1902, 71 S.W. 86, 109 Tenn. 181.Taxation 3070Taxation 3072(5)
  • A tax deed is insufficient to support ejectment where it does not recite that the land was “duly reported” as required by the statute under which the tax sale was made.  Marley v. Foster, 1899, 52 S.W. 166, 102 Tenn. 241, 18 Pickle 241.Ejectment 9(3)Taxation 3104
  • Tax title can be invalidated due to procedural irregularities in connection with tax sale.  West's Tenn.Code, § 67-5-2504.  Morrow v. Bobbitt, 1996, 943 S.W.2d 384, rehearing denied, appeal denied.Taxation 3072(1)

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