Tennessee Bankers

2017 TBA Legislative Report

The Tennessee Bankers Association is pleased to present this review of 2017 Tennessee legislation affecting the banking industry. With each entry are included a public chapter summary, link to the full text, and the effective date.

Please contact us if you would like more information about these new laws and the impact they may have on your bank.

Amy Heaslet, Senior Vice President & Deputy Counsel

 

Table of Contents

Business Regulation

Elder and Vulnerable Adult Protections

Estates and Trusts

Financial Institutions

Judicial

Local/State Government

Taxes

Miscellaneous

 

 

Business Regulation

Unfair Trade Practices – Health Insurance
Public Chapter 7 (SB 561 / HB 428)
Effective 3/22/2017

Allows an insurance producer to charge fees for services relating to an individual's purchase of an individual major medical policy if the insurance producer is not receiving commission from an insurer and if the fees are based upon a qualified written agreement.

 

Veteran Hiring Preferences
Public Chapter 9 (SB 209 / HB 165)
Effective 3/22/2017

Authorizes private employers to give hiring preference to honorably discharged veterans, spouses of a veteran with a service-connected disability, unremarried widows or widowers of a veteran who died of a service-connected disability, and unremarried widows or widowers of a member of the military who died in the line of duty.

 

Consumer Protection – Advertising of a Motor Vehicle Warranty
Public Chapter 25 (SB 737 / HB 726)
Effective 3/29/2017

Adds "advertising services for the provision of a motor vehicle warranty in a deceptive manner likely to cause the owner to believe that the advertisement originated from the original manufacturer of the motor vehicle or from the dealer that sold the motor vehicle" as a violation of the Consumer Protection Act of 1977.

 

Consumer Protection – Data Breach Disclosure
Public Chapter 91 (SB 547 / HB 545)
Effective 4/4/2017

Clarifies that the consumer protection violation of failing to disclose a security breach of personal consumer information applies to a breach of unencrypted data or encrypted data when the encryption key has also been acquired by an unauthorized person.  This legislation specifically exempts banks.

 

Homeowner’s Cancellation of Alarm Service Contract
Public Chapter 209 (SB 589 / HB 1392)
Effective 1/1/2018

Allows a homeowner to cancel a contract for alarm services for a period longer than two years by giving 30 days' written notice to the alarm systems contractor after the initial two years if the homeowner has to sell the real property due to medical reasons.

 

Litigation Financing:  Arbitration; Assignment of Contracts; Liens
Public Chapter 212 (SB 305 / HB 366)
Effective 7/1/2017

Allows a litigation financier to attempt to use arbitration or effect a waiver of a consumer's right to jury trial, and to assign a litigation financing contract. Establishes that a lien of a litigation financier on a consumer's legal claim has priority over liens that attach and take effect subsequent to the attachment of the litigation financier's lien to the consumer's legal claim, except for (a) attorney liens, insurance carrier liens, medical provider liens, or liens based upon subrogation interests or rights of reimbursement related to the consumer's legal claim, and (b) child support, Medicare, tax or any other statutory or governmental lien.

 

Assumed Names of LLCs and Nonprofits
Public Chapter 333 (SB 482 / HB 470)
Effective 5/9/2017

Removes the prohibition on nonprofit corporations and LLCs reserving or using more than five assumed names during the five-year period that an assumed corporate name is effective.

 

Revisions to Captive Insurance Laws
Public Chapter 354 (SB 1190 / HB 302)
Effective 5/11/2017

Requires captive insurance companies to pay certain penalties and interest on the late payment of premium taxes; authorizes certain captive insurance companies to apply for and operate under a letter of dormancy; provides for the conversion of protected cells and pure captive insurance companies; revises certain compensation provisions regarding examinations of insurance companies.

 

Wages Paid by Private Employers
Public Chapter 362 (SB 332 / HB 419)
Effective 5/11/2017

Revises provisions governing when wages must be paid by private employers.

 

Regulation of Industrial Hemp
Public Chapter 369 (SB 968 / HB 1164)
Effective 5/11/17

Revises certain provisions regarding the industrial hemp program, including redefining the meaning of industrial hemp; requiring any person who grows or processes industrial hemp in this state to obtain an annual license from the Department of Agriculture (DOA); and establishing that non-viable industrial hemp or any product made from such hemp procured through a licensed grower or processor or in accordance with DOA rules shall not be considered marijuana.

 

TN Uniform Limited Partnership Act of 2017
Public Chapter 440 (SB 438 / HB 484)
Effective 1/1/2018

Enacts the "Tennessee Uniform Limited Partnership Act of 2017”, which revises sections regarding limited partnerships and limited liability partnerships, including dissolution of such partnerships, and also amends sections relative to foreign limited partnerships.

 


Elder and Vulnerable Adult Protections

Elderly and Vulnerable Adult Financial Exploitation Prevention Act
Public Chapter 264 (SB 1267 / HB 1064)
TBA Legislation
Effective 7/1/2017

Enacts the "Elderly and Vulnerable Adult Financial Exploitation Prevention Act", which Enacts the "Elderly and Vulnerable Adult Financial Exploitation Prevention Act," which will aid banks in combating elder financial exploitation by permitting them, when there is reasonable cause to suspect that financial exploitation or theft has occurred, to delay suspicious transactions, notify certain authorized persons of suspected abuse, or refuse to accept a power of attorney.

 

Securities – Elder Protections
Public Chapter 424 (SB 1192 / HB 304)
Effective 5/18/2017

Makes various changes to the regulation of securities under the Tennessee Securities Act of 1980, such as granting the commissioner of commerce and insurance authority to restrict certain exemptions, increasing penalties for violations wherein senior citizens and adults with certain mental or physical dysfunctions are victims, and altering filing and renewal requirements.

 

Commission on Aging and Disability – Provisions for Vulnerable Persons
Public Chapter 427 (SB 1287 / HB 415)
Effective 7/1/2017

Requires the executive director of the commission on aging and disability to establish within the commission a public guardian working group; requires background checks for persons who volunteer in a position that involves providing direct contact with or direct responsibility for a service recipient in a facility or service licensed under the Mental Health, Alcohol and Drug Abuse Prevention and/or Treatment, Intellectual and Developmental Disabilities, and Personal Support Services Licensure Law; revises and adds other provisions regarding vulnerable persons.

 

Elderly and Vulnerable Adult Protection Act
Public Chapter 466 (SB 1230 / HB 810)
Effective 5/25/2017; 7/1/2017

Enacts the "Elderly and Vulnerable Adult Protection Act", which specifies that abuses against elderly or vulnerable adults are felonies of varying degrees of severity. Authorizes courts to order a person convicted of abuses against elderly or vulnerable Adults to refrain from any contact with the victim. Allows for convicted persons to request a hearing to challenge the accuracy of the reports, conclusions of hearings, or factual issues related to the correct identity of the victim.

 


Estates and Trusts

Probate Law Updates
Public Chapter 280 (SB 1163 / HB 1016)
Effective 7/1/2017

Makes various changes to probate law, including requiring that the receipt of a distributee or legatee be executed under penalty of perjury or sworn before the clerk or a notary public.

 

Revises Wills, Trusts and Guardianship Laws
Public Chapter 290 (SB 769 / HB 567)
Effective 7/23/2017

Revises various provisions relative to wills, trusts, and guardianships, including that if a representative of the decedent's estate files a claim against the estate, the clerk of the court shall give written notice to each residuary beneficiary of the estate within five days of they filing of a claim.

 


Financial Institutions

Campaign Funds
Public Chapter 109 (SB 377 / HB 704)
Effective 7/1/2017

Requires that campaign funds be deposited into a financial institution insured by the FDIC or the national credit union administration that is authorized to do business in this state.

 

Licensing of Non-depository Financial Institutions
Public Chapter 122 (SB 1202 / HB 314)
Effective 7/1/2017; 4/1/2018; 7/1/2018; 4/1/2019

Revises various provisions relating to the licensing of certain non-depository financial institutions.

 

Permissible Interest Rate for Industrial Loan and Thrift Companies
Public Chapter 164 (SB 256 / HB 390)
Effective 4/24/2017

Increases the amount of interest that may be charged by an industrial loan and thrift company on certain loan amounts in excess of $100, as follows: a rate not in excess of 36 percent per annum, computed on the first $2,500 of the loan, 30 percent per annum computed on the part of the loan in excess of $2,500 and below $5,000, and 24 percent per annum on that part of the loan above $5,000.

 

Extends Time of Foreclosure Sales
Public Chapter 187 (SB 236 / HB 95)
Effective 4/19/2017

Extends the time of sale of land to foreclose a deed of trust, mortgage, or other lien securing the payment of money or other thing of value or under judicial orders or process from "10:00 a.m - 4:00 p.m." to "9:00 a.m. - 7:00 p.m.".

 

Credit Unions – Settlement of Accounts upon Death
Public Chapter 190 (SB 357 / HB 150)
Effective 4/27/2017

Increases from $10,000 to $15,000 the aggregate amount that a credit union may pay out of all accounts or contents of safe deposit boxes maintained by a deceased shareholder or depositor.

 

Interest Rate Increase under Credit Card State Bank Act
Public Chapter 225 (SB 997 / HB 772)                       
TBA Legislation
Effective 7/1/2017

Increases the maximum annual interest rate (or equivalent daily, weekly, monthly, or quarterly rate) that a bank may charge and collect with respect to loans made under the Credit Card State Bank Act from 21 percent to 30 percent.

 

Tax Credits for Certain Financial Institutions
Public Chapter 417 (SB 969 / HB 1075)
Effective 5/18/2017

Expands tax credits for financial institutions that make loans or contributions to eligible housing entities that create or develop low-income housing.

 


Judicial

Delinquent Property Taxes – Grounds for Default
Public Chapter 198 (SB 257 / HB 579)
Effective 7/1/2017

Specifies that return of the receipt for a mailed summons or notice that is either signed by the defendant or marked refused is grounds for a default judgment in a delinquent property tax case.

 

Actions against Real Estate Appraisers
Public Chapter 234 (SB 279 / HB 376)
Effective 7/1/2017

Limits any action to recover damages against a real estate appraiser arising out of the appraiser's real estate appraisal activity to being brought within one year from a person's discovery of the act or omission giving rise to the action; limits any disciplinary action against a real estate appraisal by the Board of Real Estate Appraisers from three years from the date the appraisal was completed.

 

Allows Actions for “Spoofing”
Public Chapter 257 (SB 511 / HB 1050)
Effective 7/1/2017

Creates a Class A misdemeanor, civil penalties enforceable by the attorney general and reporter, and a private right of action related to "spoofing" of caller identification, facsimile, and text messaging services.

 

Notice of Trespassing
Public Chapter 286 (SB 1182 / HB 78)
Effective 7/1/2017

Authorizes property owners to provide notice that trespassing is prohibited on their property by marking trees and posts with purple paint as an alternative to posting signs.


Liens on Floating Cabins
Public Chapter 314 (SB 419 / HB 473)
Effective 7/1/2017

Establishes that a marina has a lien on a floating cabin for any assessment levied against the floating cabin pursuant to a written lease or service contract between the marina and the owner from the time the assessment becomes due, which lien may be enforced by judicial action.  Establishes other requirements regarding marina liens on floating cabins.

 

Organized Retail Crime Prevention Act
Public Chapter 472 (SB 120 / HB 55)
Effective 7/1/2017

Enacts the "Organized Retail Crime Prevention Act”, which penalizes a person who works with one or more people to commit theft of merchandise with a value exceeding $1,000 (assembled over a 90 day period) with an intent to sell the property for gain. Also punishes someone who receives, possesses, or purchases any merchandise or stored value cards obtained from a fraudulent return with knowledge that the property was obtained illegally.

 


Local/State Government

Department of Financial Institutions
Public Chapter 49 (SB 70 / HB 234)
Effective 3/31/2017             

Extends the department of financial institutions to June 30, 2021.

 

State Trust of Tennessee
Public Chapter 65 (SB 93 / HB 257)
Effective 3/31/2017

Terminates the state trust of Tennessee with no subsequent wind down year.

 

TN Financial Literacy Commission
Public Chapter 73 (SB 104 / HB 235)
Effective 3/31/2017

Extends the Tennessee financial literacy commission four years to June 30, 2021.

 

Fundraising for TN Financial Literacy Commission
Public Chapter 81 (SB 417 / HB 469)
Effective 3/31/2017             

Clarifies state treasurer has authority to raise funds for the Tennessee financial literacy commission.

 

Bonds on Public Works Contracts
Public Chapter 92 (SB 681 / HB 981)
Effective 4/4/2017

Clarifies that the statutory amount of the bond required from contractors on all public works contracts in excess of $100,000 is the minimum amount for the bond.

 

Tennessee Advisory Commission on Intergovernmental Relations
Public Chapter 116 (SB 97 / HB 210)
Effective 4/12/2017

Extends the Tennessee advisory commission on intergovernmental relations four years to June 30, 2021; adds an attendance requirement for appointed members – must attend 50 percent of meetings or be removed.

 

Transfer of Property to IDB in Oak Ridge
Public Chapter 219 (SB 707 / HB 978)
Effective 4/28/17

Authorizes, in certain circumstances, transfer of parcels of property located on a remediation site in Oak Ridge to the industrial development board consistent with the terms of the conveyance.

 

Administrative Procedures Act
Public Chapter 230 (SB 1217 / HB 326)
Effective 4/24/17

Authorizes commissioners and CEOs of administrative departments to evaluate certain actions by a regulatory board to determine whether the action may constitute a potentially unreasonable restraint of trade.

 

Dept. of Revenue to Report on Franchise and Excise Tax Credits
Public Chapter 251 (SB 828 / HB 844)
Effective 5/2/2017

Requires the commissioner of the department of revenue to report, by January 1, 2018, and each January 1 thereafter, certain information regarding franchise and excise tax credits claimed for tax periods ending during the previous fiscal year.

 

Power of Regional Airport Authorities to Borrow Funds
Public Chapter 128 (SB 20 / HB 28)
Effective 4/17/2017

Confers certain powers on regional airport authorities to borrow money for corporate purposes and issue revenue bonds.

 

Housing Authorities Ability to Redevelop Areas for Transit Projects
Public Chapter 254 (SB 783 / HB 1384)
Effective 5/2/2017

Establishes authorization and procedures for housing authorities to redevelop certain areas for transit projects.

 

Dyer County – Removal of Overgrown Vegetation
Public Chapter 303 (SB 1457 / HB 1440)
Effective 5/5/2017

Allows removal of overgrown vegetation and accumulated debris on owner-occupied residential property in Dyer County.

 

Forfeiture Hearings by Administrative Law Judges
Public Chapter 352 (SB 1001 / HB 1190)
Effective 7/1/2017; 1/1/2019

Requires the administrative head of an applicable agency to contract with the Secretary of State for use of administrative law judges to conduct forfeiture hearings. Requires administrative law judges to issue final orders for forfeitures for purposes of appealing the order. Broadens the counties in which a notice of review may be filed for forfeiture proceedings.

 

Emergency Communications Districts – Fidelity Bond Coverage
Public Chapter 418 (SB 970 / HB 1076)
Effective 5/18/2017

Authorizes an emergency communications district to purchase, in lieu of surety bonds, fidelity bonds to cover any losses from breach of the condition of faithful discharge of the duties of any board member, executive committee member, employee, officer, or any other authorized person of an emergency communications district who receives public funds, has authority to make expenditures from public funds, or has access to any public funds.

 

Eminent Domain – Taxing of Costs
Public Chapter 422 (SB 1184 / HB 1167)
Effective 5/18/2017

Revises and enacts various provisions governing eminent domain, including provisions governing the taxing of costs.

 

Revisions to Civil Asset Forfeiture Procedures
Public Chapter 441 (SB 644 / HB 813)
Effective 5/25/2017; 7/1/2017

Expands the reporting requirements for the annual civil asset forfeiture report provided by the department of safety to certain committees of the general assembly; revises other provisions related to civil asset forfeiture.

 

2016-2017 Appropriations Bill
Public Chapter 460 (SB 483 / HB 511)
Effective 7/1/2017

Makes appropriations for the fiscal years beginning July 1, 2016, and July 1, 2017.

 

State Authority to Issue Bonds
Public Chapter 462 (SB 485 / HB 513)
Effective 5/25/2017

Authorizes the state to issue and sell bonds of up to $80 million.

 

State Spending Authorization
Public Chapter 463 (SB 486 / HB 514)
Effective 5/25/2017

Authorizes state spending to exceed growth in revenues by $438 million or 2.85 percent.

 


Taxes

IMPROVE Act
Public Chapter 181 (SB 1221 / HB 534)
Effective 4/26/2017; 7/1/2017

Enacts the "Improving Manufacturing, Public Roads and Opportunities for a Vibrant Economy (IMPROVE) Act", which, among other things, increases the tax on gasoline by 6 cents per gallon and 10 cents per gallon on  diesel over the next 3 years; decreases the sales tax on groceries from 5 percent to 4 percent; phases out the Hall Income Tax over the next five years; and allows a qualifying Tennessee manufacturer doing business both in-state and out-of-state to elect to apportion its net earnings and net worth to Tennessee based on a single sales factor.

 

Revisions to Property Tax Law
Public Chapter 299 (SB 745 / HB 934)
Effective 7/1/2017

Makes various technical changes to processes governing the sale of property in delinquent property sales, judicial challenges of tax sales, suits quieting title to tax sales, title defects, tender of payments, parcel insurance and liability, and the right to redemption time limitations.

 

De Minimus Delinquent Property Taxes
Public Chapter 312 (SB 1370 / HB 425)
Effective 5/5/2017

Authorizes the county trustee or other property tax collecting official to decline to bill the tax, decline to refer the tax for further collection, or abate any penalty or interest otherwise due for late payment of the tax in the instance of a de minimus property tax of less than five dollars that is authorized by a private act, resolution, or ordinance levying the tax.

 

Property Exemption for Certain Institutions
Public Chapter 409 (SB 786 / HB 1369)
Effective 5/18/2017

Revises provisions governing real and personal property tax exemption for certain religious, charitable, scientific, or nonprofit educational institutions.

 

TACIR Study on PILOT Agreements by Industrial Development Corporations
Public Chapter 431 (SB 1362 / HB 1223)
Effective 5/18/2017

Directs the Tennessee advisory commission on intergovernmental relations to perform a study of the payment in lieu of ad valorem tax agreements and leases entered into by industrial development corporations organized by municipalities.

 

Hall Income Tax Exemption
Public Chapter 453 (SB 193 / HB 331)
Effective 5/25/2017

Exempts persons who are 100 or older from the Hall income tax for tax years beginning January 1, 2018, and thereafter.

 

Property Tax – Classification Changes of Certain Property
Public Chapter 490 (SB 1363 / HB 1367)
Effective 6/6/2017; 7/16/2017

For property tax assessment purposes, changes the classification of property of certain local exchange telephone companies and telephone cooperatives from public utility to industrial and commercial property; discontinues the telecommunications ad valorem tax reduction fund.

 


Miscellaneous

Codifies the Acts of 2016
Public Chapter 30 (SB 1229 / HB 1147)
Effective 3/29/2017

Codifies the Acts of the 2016 regular and extraordinary legislative sessions.

 

Charitable Fundraising Counsel
Public Chapter 146 (SB 693 / HB 588)
Effective 4/17/2017; 7/1/2017

Deletes registration requirement for professional fund raising counsel, which are persons who, for compensation, plan, manage, advise, consult, or prepare material for a charitable organization for the solicitation of contributions in this state, but do not engage any person to solicit contributions on behalf of a charitable organization.

 

Broadband Accessibility
Public Chapter 228 (SB 1215 / HB 529)
Effective 4/24/17

Enacts the "Tennessee Broadband Accessibility Act”, which creates a grant program for promoting the deployment and adoption of broadband internet access services.

 

HOAs Prohibited from Banning Display of U.S. Flag
Public Chapter 331 (SB 469 / HB 456)
Effective 7/1/2017

Prohibits a homeowners' association from adopting or enforcing a dedicatory instrument provision that prohibits, or has the effect of prohibiting, a property owner from displaying the flag of the United States of America or an official or replica flag of any branch of the United States armed forces on the property owner's property; allows certain restrictions regarding display.

 

Revisions to Workers Compensation Law
Public Chapter 380 (SB 297 / HB 666)
Effective 5/18/2017

Revises various provisions of the Workers' Compensation Law, including changing guidelines in which an appeal procedure pursuant to the administrator's system of utilization review is reviewed; specifying that all recommended invasive procedures be subject to utilization review at any time; requiring that the physicians, surgeons, chiropractors or specialty practice groups included on the employer's medical review panel not be associated in practice together; and increasing from $7,500 to $10,000, the maximum amount to be paid by an employer for burial expenses in a case where death results from injury or occupational disease.

 

Contesting Fraudulent UCC Financing Statements
Public Chapter 406 (SB 726 / HB 535)
Effective 5/18/2017; 10/1/2017

Creates a streamlined process for certain public officials to contest Uniform Commercial Code financing statements that they believe to lack any legal basis.

 

Uniform Unclaimed Property Act
Public Chapter 457 (SB 371 / HB 420)
Effective 5/25/2017; 7/1/2017

Enacts the "Uniform Unclaimed Property Act”, which revises the definition of "property" to mean tangible property or a fixed and certain interest in tangible property held, issued, or owed in the course of a holder's business or by a government, agency, or instrumentality. Specifies that property includes all income from the property or property evidenced by money, virtual currency, interest, dividend, check, draft, deposit or payroll card. Also specifies that the definition of property includes a credit balance, customer's over payment, stored-value card, security deposit, refund, unpaid wage and other items. Specifies circumstances and time frame by which property is presumed abandoned.