Tennessee Bankers

2021 Legislative Report

The Tennessee Bankers Association is pleased to present this review of 2021 Tennessee legislation affecting the banking industry or that may be of general interest to Tennessee bankers. Each entry includes a public chapter summary, link to the full text, and date.

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

Table of Contents


Banks and Other Financial Institutions

Banks’ Holding Period for Nonreal Property

**TBA Legislation**

Public Chapter 78

(SB 175 / HB 58)

Effective Date:  3/31/2021

Changes, from 6 months to 12 months, the permitted holding period by a bank for non-real-property acquired in satisfaction of a loan.


Industrial Loan and Thrift Companies – Fees Charged for Servicing Loans

Public Chapter 91 (SB 344 / HB 421)

Effective Date:  7/1/2021

Increases existing fees, and adds additional fees, that an industrial loan and thrift company, industrial investment company, or industrial bank may charge to service various loans.


Discharging of Lien on Motor Vehicle – Notification Required 

Public Chapter 240 (SB 112 / HB 331)

Effective Date:  7/1/2021

Clarifies that a lienor is required to send notice of a discharged lien to the department of revenue on the date the lien is discharged and that the department must be notified of the discharge within 72 hours of the date of discharge.


Reduction in Value of Unclaimed Property to be Reported

Public Chapter 258 (SB 611 / HB 469)

Effective D5ate:  4/28/2021

Changes the date used to determine when property held in a pension or retirement account is presumed abandoned; changes, from $50 to $25, the threshold value for property to be included in the report due to the treasurer under the Uniform Unclaimed Property Act; and changes the exception to allow the treasurer to waive the claim requirement and deliver the property directly to a person.


State Bank Request for Waiver or Modification of Terms Applicable to a National Bank

**TDFI Legislation**

Public Chapter 283 (SB 745 / HB 77)

Effective Date:  4/30/3021

Authorizes a state bank to request from the commissioner a waiver or modification of certain terms and conditions applicable to a national bank; authorizes a state bank to request from the commissioner authority to exercise certain incidental powers or engage in certain incidental activities; and requires commissioner to publish a summary of applications made for waiver, modification, or authorization.


Extends Time for Banks to Collateralize Public Deposits

**TBA Legislation**

Public Chapter 393

Effective Date:  5/11/2021

Revises on a temporary basis, from May 11, 2021, to January 1, 2023, provisions governing collateral for public deposits so that a bank that accepts any public deposit between May 1, 2021, and December 31, 2022, that would increase its collateral by 25 percent will have 10 calendar days from the date of the deposit to secure additional collateral to secure such increase, whereas current law provides for 2 business days.


Study on Feasibility of Creating State Gold Depository

Public Chapter 585

Effective Date:  5/27/2021

Requires the Tennessee advisory commission on intergovernmental relations (TACIR) to study the feasibility of creating a state gold depository and to report its findings to the speakers of the senate and house of representatives no later than January 1, 2022.


Business Regulation

Insurance Policies – Rules of Construction

Public Chapter 67 (SB 1376 / HB 523)

Effective Date:  3/29/2021

Clarifies that, except when dealing with an assignment of benefits to a healthcare provider, the rights, duties, or benefits provided by a policy of insurance may be assigned only as expressly provided by the terms of the policy of insurance or as otherwise expressly allowed by the insurer.


Remote Shareholder Meetings for Corporations

Public Chapter 85 (SB 181 / HB 106)

Effective Date:  4/7/2021

Requires corporations to implement certain measures and maintain certain records when allowing shareholder meetings to be conducted by remote means.


Real Estate Brokers’ Compensation 

Public Chapter 94 (SB 569 / HB 605)

Effective Date:  4/7/2021

Authorizes direct payments to be made to a business entity solely owned by a broker, affiliate broker, or other licensee licensed by the real estate commission formed for the purpose of receiving compensation for the broker, affiliate broker, or other licensee.


Business Fairness Act

Public Chapter 155 (SB 474 / HB 855)

Effective Date:  7/1/2021

Enacts the "Business Fairness Act," which allows businesses that comply with safety precautions and guidelines issued by the government or other authorized agency during a state of emergency to continue or resume their business; and specifies that this applies when the threat to the public is a pandemic, epidemic, bioterrorism event, infectious agent or biological toxin.


Workers Comp Disputes 

Public Chapter 286 (SB 764 / HB 94)

Effective Date:  4/30/2021

Requires that disputes concerning an employer's failure to provide medical care and treatment, medical services or medical benefits, or both, meet certain requirements; removes requirement that all compensation be paid prior to an employee qualifying for vocational recovery assistance; extends current provisions, as amended, for four years; and authorizes workers' compensation judges to conduct judicial settlement conferences.


Prohibits Classifying Workers as Essential or Non-Essential

Public Chapter 384 (SB 1573 / HB 37)

Effective Date:  5/11/2021

Prohibits a local governmental entity or the executive head of a local government from creating categories or classes of nonessential businesses, trades, professions, or industries for the purpose of suspending lawful commerce, encumbering trade, or denying citizens the right to work if such activities are otherwise lawful in this state unless an explicit order of the local fire marshal or a court of competent jurisdiction declares that the business operating poses a clear and present danger to the citizenry of this state.


Lemon Law for Farm Machinery

Public Chapter 411

Effective Date:  7/1/2021

Requires a manufacturer, under certain circumstances, to replace farm machinery with comparable farm machinery or accept return of the farm machinery and refund the full purchase price and related repair costs, less a reasonable allowance for use and a reasonable offset for physical damage; and provides protections and notices to lienholders in the event a cash refund is issued or the encumbered farm machinery is replaced.


Insurance Modernization Act

Public Chapter 527

Effective dates:  5/25/2021; 7/1/2021

Removes the current requirement that an assuming insurer appoint the commissioner of commerce and insurance as its agent for service of process in this state; allows credit in instances where the reinsurance is ceded to an assuming insurer who satisfies certain conditions; requires the commissioner create and publish a list of reciprocal jurisdictions and allows commissioner to remove a jurisdiction from the list of reciprocal jurisdictions; and authorizes protected cell captive insurance companies to maintain a level of surplus of $100,000, rather than $100,000 at the core as long as each individual protected cell maintains a level no less than $25,000.


Estates, Trusts, Guardianships and Conservatorships

Filing of Claims by Bureau of TennCare against TennCare Recipients’’ Estates

Public Chapter 102 (SB 761 / HB 93)

Effective Date:  4/7/2021

Sets time limits on the filing of claims by the bureau of TennCare against TennCare recipients' estates; and authorizes the probate estate of a decedent to close without certain financial documents from the Division, if the division did not file a claim with the probate court clerk against the decedent's estate.


Updates to Tennessee Trust Code

**TBA Legislation**

Public Chapter 420

Effective Dates:  7/1/2021; 1/1/2022

Makes various changes to Tennessee’s trust laws, including, but not limited, allowing decanting to eliminate a beneficiary’s mandatory distribution rights and for remainder beneficiary to become current permissible beneficiaries; clarifying that nonjudicial settlement agreements can be used to establish directed trusts; clarifying protections for trustees of silent trusts; eliminating requirement for signing a new affidavit for additions to asset protection trusts; increasing maximum duration of purpose trusts; and, effective January 1, 2022, allowing trusts that relocate from another jurisdiction to register with the Secretary of State’s office. 


Allows Real Property Conveyances to a Trust to Vest Title in the Trustee of the Trust

Public Chapter 449

Effective Date:  7/1/2021

Allows real property conveyances to a trust to vest title in the trustee of the trust; and requires that public records referencing a trust be indexed by the name of the trust, if stated in the document, and in the name of each trustee listed in the document.



Open Carry of Firearms

Public Chapter 108 (SB 765 / HB 786)

Effective Date:  7/1/2021

Creates an exception to the offense of unlawful carrying of a firearm, if a person meets age requirements, lawfully possesses the handgun, and is in a place that the person is lawfully present; but, does not allow a person to carry a firearm into a business where firearms are lawfully prohibited.


Tennessee Firearms Protection Act

Public Chapter 444

Effective Date:  5/13/2021

Prohibits the expenditure of state or local funds to implement, regulate, or enforce any federal law or executive order regulating the sale of firearms, ammunition, or firearm accessories if the expenditure of funds would violate a state law or the state constitution; prohibits the allocation of state or local personnel or property to implement, regulate, or enforce any federal law or executive order regulating the sale or possession of firearms, ammunition, or firearm accessories if the expenditure would violate state law or the state constitution; and establishes that a violation of this legislation by a state or local government entity may be reviewed by the attorney general, reporter and the general assembly and may result in the entity's loss of funding for the next fiscal year after the violation.


Firearms Information Privacy Protection Act

Public Chapter 540

Effective Date:  7/1/2021

Enacts the Firearms Information Privacy Protection Act, which creates a Class E felony offense for any personnel of the state, a local governmental agency or political subdivision, when acting in official capacity, to intentionally disclose information that identifies another person as the purchaser or owner of a firearm, firearm ammunition, or firearm accessory for the purpose of compiling or facilitating the compilation of a federal firearms registry or database or the confiscation of firearms, but specifies some exceptions. 


Tennessee Second Amendment Sanctuary Act

Public Chapter 553

Effective Date:  5/26/2021

Enacts the Tennessee Second Amendment Sanctuary Act, which declares any federal law, treaty, executive order or other regulation that have been found by the supreme court of the United States or the Tennessee supreme court to violate Article I, Section 26 of the Constitution of Tennessee or the Second Amendment to the United States Constitution to be null and unenforceable in the state; prohibits the state and all political subdivisions from using public resources to enforce, administer or cooperate with the enforcement of any such regulation; and provides that a public official is subject to ouster for violation of present law that prohibits the use of public resources to enforce any federal law, executive order, rule, or regulation regulating the ownership, use, or possession of firearms, ammunition, or firearm accessories, if the such action would result in the violation of another Tennessee statute, Tennessee common law, or the Constitution of Tennessee.


Second Amendment Privacy and Protection Act of 2021

Public Chapter 554

Effective Date:  7/1/2021

Enacts the Second Amendment Privacy and Protection Act, which creates a Class E felony offense for a state or local government entity, official, employee, or agent to knowingly create or maintain a registry of firearm or firearm accessories or transmit such to the federal government; specifies the exceptions of such; authorizes civil action as a result of violation; and prohibits the state funding of a state department or local government that commits such an offense for each fiscal year.



Increase to Homestead Exemption

**TBA Legislation**

Public Chapter 301 (SB 566 / HB 676)

Effective Date:  1/1/2022

Increases the maximum homestead exemption for individuals to $35,000 and $52,500 for jointly held property; and removes the various tiers of the homestead exemption based on age and whether an individual has a minor child.


Procedures for Giving Notice in Conservatorship Proceedings

Public Chapter 305 (SB 1440 / HB 581)

Effective Date:  5/4/2021

Specifies the procedures for giving notice in conservatorship proceedings; specifies that certain examination reports in conservatorship proceedings are confidential and not open for inspection by the public.


Attorney’s Fees in Civil Asset Forfeiture Case

Public Chapter 423

Effective Date:  7/1/2021

Revises provisions governing awards of attorney's fees in certain forfeiture actions – specifically that an award of reasonable attorney’s fees order be an administrative law judge or court shall not exceed $10,000 and that failure to submit documentation of an attorney’s time and expenses must result in no attorney’s fees being awarded.


Safe Seniors Act of 2021

Public Chapter 500

Effective Dates:  5/25/2021; 10/1/2021

Expands the meaning of financial exploitation, as used in the Elderly and Vulnerable Adult Protection Act, to include the act of obtaining or exercising control over an elderly or vulnerable adult’s property, without receiving the elderly or vulnerable adult’s effective consent, by an accomplice committed with the intent to benefit the caregiver or other third party.


Appeal of Actions Against the State

Public Chapter 546

Effective Date:  7/1/2021

Creates a right of appeal in an action brought against this state, a department or agency of this state, or an official of this state in their official capacity that challenges the constitutionality of a state statute, whereby the state may appeal as of right from an interlocutory order of a circuit or chancery court of this state that grants, continues, or modifies an injunction or denies a motion to dissolve or modify an injunction.


Panel of Judges to Decide Constitutionality of Statutes and Executive Orders

Public Chapter 566

Effective Date:  7/1/2021

Establishes process for three-judge panel hearing civil actions in which the complaint: challenges the constitutionality of a statute, executive order, or rule; includes a claim for declaratory judgment or injunctive relief; and is brought against the state, a state department or agency, or a state official acting their official capacity.


Local/State Government

Sunset Laws:  Extension of Dept. of Economic and Community Development

Public Chapter 42

(SB 49 / HB 274)

Effective Date:  3/29/2021

Extends the Tennessee department of economic and community development to June 30, 2025.


Sunset Laws:  Extension of Dept. of Financial Institutions

Public Chapter 43

(SB 50 / HB 275)

Effective Date:  3/29/2021

Extends the Tennessee department of financial institutions to June 30, 2025.


Sunset Laws:  Extension of TN Financial Literacy Commission

Public Chapter 48

(SB 87 / HB 307)

Effective Date:  3/29/2021

Extends the Tennessee financial literacy commission to June 30, 2027.


Bonds and Notes Issued by Local Governments

Public Chapter 128 (SB 539 / HB 657)

Effective Date:  4/13/2021

Requires that certain notes issued by governing bodies of municipalities related to public works projects be approved by the comptroller of the treasury or the comptroller's designee; and makes other revisions to provisions governing bonds and notes issued by local governments.


Collection of Funds on Behalf of State by Third Party

Public Chapter 172 (SB 743 / HB 76)

Effective Date:  4/20/2021

Authorizes a department, institution, office, or agency of the state to enter into an agreement with a third party to collect state funds on its behalf under which the third party is permitted to deduct its service fee from the funds collected prior to deposit when such agreement is approved in accordance with present law governing procurement; and requires the chief procurement officer to file an annual report listing such approved contracts with the chairs of the finance, ways and means committees of the house and senate.


Certification of Electronic Documents for Registration by a County Register

Public Chapter 181 (SB 1263 / HB 633)

Effective Date:  7/1/2021

Requires either a licensed attorney or the custodian of the original version of an electronic document, instead of the custodian of the electronic version, to certify the electronic document for registration by a county register.


Uniformity in Local Government Lease Financing Act of 2021

Public Chapter 196 (SB 547 / HB 1462)

Effective Date:  4/22/2021

Requires public entities, prior to entering into a lease financing, to obtain approval of the comptroller of the treasury and submit approval to the governing body of the public entity for consideration; establishes guidelines on payments under the lease financing and various specifications of any lease financing; prohibits public entities from a lease financing that would incur indebtedness to finance; and specifies that the new law does not expand the authority of any public entity to enter into any lease financing.


Requirements Placed on Contractors under Public Contracts

Public Chapter 234 (SB 1150 / HB 1112)

Effective Date:  4/22/2021

Prohibit a local government from establishing such requirements for bids, proposals, and agreements relating to an improvement of real property; expands the list of prohibited requirements; voids any ordinance, rule, or policy adopted by a local government which attempts to prevent or restrict contractors from bidding or contracting based on the contractor’s failure or refusal to perform the prohibited requirements or which gives preference to a contractor which agrees to such prohibited requirements; and prohibits a local government from restricting contractors from bidding, proposing, or accepting a contract except when there is a finding or order that the contractor willfully violated federal or state law.


Establishment of Captive Insurance Company for the State

Public Chapter 366 (SB 1151 / HB 1010)

Effective Date:  5/11/2021

Authorizes the board of claims to approve, and the state treasurer to establish and maintain, a captive insurance company for the state.


Recreates Elder Abuse Task Force

Public Chapter 464

Effective Date:  5/18/2021

Recreates the elder abuse task force, which was terminated and dissolved January 15, 2021; and extends the date for the task force to submit its findings and recommendations to the governor and general assembly to January 15, 2022.


Real Property/Property Rights

Selling Property Prior to Obtaining Approval of Final Subdivision Plat

Public Chapter 39 (SB 682 / HB 407)

Effective 3/23/2021

Permits an owner or agent of the owner of real property to, prior to closing on the property, agree or negotiate to sell the property by reference to a subdivision plat before the final subdivision plat is approved by the planning commission.


HOA Rules Regarding Posting of Signage by Homeowner

Public Chapter 80

(SB 450 / HB 128)

Effective Date:  3/31/2021

Prohibits a homeowners' association from prohibiting the use of a sign posted to warn the public of health, safety, or dangerous natural conditions associated with water on the property in certain circumstances; and clarifies date of application of prohibition on HOA prohibiting property owners from displaying flags to any dedicatory instruments entered into before, on, or after July 1, 2021.


Commercial Property Assessed Clean Energy Act (C-PACE)

Public Chapter 138 (SB 795 / HB 667)

Effective Date:  7/1/2021

Authorizes C-PACE lending in TN for commercial – not residential – properties if authorized by the local government seeking to offer this type of lending. C-PACE is a market-based program that enables private sector capital providers to offer financing for retrofits, redevelopments, and new construction of commercial buildings and multi-family housing units.  Any C-PACE financing must be approved by the lender; be repaid through a voluntary assessment added to the property’s local tax bill; and an administrator may be selected to regulate the program.  


Prohibition of HOAs on Use of Residential Property as Long-Term Rentals

Public Chapter 151 (SB 1381 / HB 1127)

Effective Date:  5/1/2021

Requires a homeowners' association to provide, upon written request of a member, a record of certain information in a vote to amend a declaration that prohibits or effectively prohibits the use of residential property as a long-term rental property; creates a vested right in an owner to use single-family residential property as long-term rental property if certain conditions exist; and requires business entity owners of residential property to notify a homeowners' association of certain information.


Required Signate for Public Restrooms

Public Chapter 453

Effective Date:  7/1/2021

Requires a public or private entity or business that operates a building or facility open to the general public to post a notice at the entrance of each public restroom of the entity's or business's policy of allowing a member of either biological sex to use any public restroom within the building or facility, if the entity or business maintains such a policy; and provides specifications for the required signage.  



Taxes on COVID-19 Related Small Business Relief Payments

Public Chapter 154 (SB 775 / HB 776)

Effective Date:  4/14/2021

Establishes that funds received between March 1, 2020, and December 31, 2021, through the Coronavirus Relief Fund are exempt from excise tax calculations of net earnings or loss.


Statute of Limitations for Tax Collection

Public Chapter 217 (SB 765 / HB 84)

Effective Date:  4/22/2021

Tolls the statute of limitations for collection of taxes upon the imposition of a bankruptcy stay or upon the filing of a probate, receivership, or assignment for benefit of creditors proceeding; and permits statute of limitations to begin running 30 days after the stay is lifted or the proceeding prohibiting collection ends.


Public Disclosure of Records Pertaining to Business Tax Records

Public Chapter 327 (SB 302 / HB 560)

Effective Date:  5/4/2021

Makes certain records, documents, and information pertaining to payers of the business tax subject to public disclosure as long as the taxpayer consents to the public disclosure.