- In any case where a residential ground rent is created, the agreement therefor shall:
(1) Be reduced to writing;
Terms Used In Tennessee Code 66-30-103
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Fee simple: Absolute title to property with no limitations or restrictions regarding the person who may inherit it.
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Obligee: means any person or entity to whom a residential ground rent is owed, including its successors and assigns. See Tennessee Code 66-30-102
- Obligor: means one (1) or more individuals who are obligated to pay a residential ground rent, including their successors, sublessees or assigns. See Tennessee Code 66-30-102
- Residential ground rent: means a rent or charge paid for the use of land, whether or not title thereto is transferred to the user, or a lease of land, for residential purposes:
(A) Which is assignable by the obligor without the obligee's consent. See Tennessee Code 66-30-102
- State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
- Trustee: A person or institution holding and administering property in trust.
- written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(2) Be in recordable form;
(3) Disclose the date, the names of the parties, the ground rent and any future adjustments to it, when such rent is payable, the duration of the agreement and the value of the land at the time the agreement is made. If the parties have so agreed, the agreement shall state the amount for which the ground rent may be redeemed. Such agreement shall be included as a part of the deed or other instrument of transfer;
(4) Require that either party shall give without additional consideration, written certification to the other or to the holder, trustee or beneficiary of any deed of trust or mortgage upon the interest of the obligor in the real estate, of any current facts and conditions under such agreement between the obligor and the obligee, including, but not limited to, any defaults, claims, counterclaims, setoffs, prepaid rents or charges and whether or not such agreement is in good standing and full force and effect;
(5) Require that the obligee not mortgage or encumber the obligee’s interest in the real estate during the term of the agreement, and, that at the time the obligor desires to exercise the obligor’s right to redeem, the obligee shall be ready, willing and able to deliver a general warranty deed conveying the fee simple title interest to the obligee’s interest in the real estate to the obligor, the obligor’s heirs, administrators, successors and assigns, free and clear of any title exceptions, other than those set out in such agreement, those created by the obligor and those which do not impair the merchantability of title;
(6) Require that such holder, trustee or beneficiary shall be a third party beneficiary, but without any obligations, under such agreement;
(7) Require that such holder, trustee or beneficiary may elect in writing at any time after default under or foreclosure of its deed of trust or mortgage to assume the interest of the obligor under the agreement between the obligor and the obligee and the obligee may not declare the agreement terminated because the holder, trustee, or beneficiary has stepped into the shoes of the obligor or has assumed the obligor’s position; and such holder, trustee or beneficiary shall thereafter be responsible only for any preexisting declared defaults of the obligor which can be cured by the payment of money, and not otherwise;
(8) Require that the obligee give written notice of any declared default under the agreement between the obligor and the obligee to such holder, trustee or beneficiary, and such holder, trustee or beneficiary shall have a ninety-day period of time after receipt of the notice to cure any such default of the obligor which can be cured by the payment of money, or a reasonable period of time to correct the declared default if such default cannot be cured by the payment of money alone. The obligee shall be required to give such notice only to those holders, trustees or beneficiaries who have recorded their interest in the real estate in the register’s office for the county in which the real estate is located at the time of sending of the notice. Such holder, trustee or beneficiary shall have the right to cure such default, but shall not be obligated to cure such default or to do any act required of the obligor under the agreement between the obligor and the obligee which creates the residential ground rent;
(9) Such agreement between the obligor and the obligee creating the residential ground rent may provide that the obligee shall subordinate such obligee’s interest in the real estate unto the rights of a holder of a deed of trust or mortgage on the interest of the obligor in the real estate, including the rights of any trustee or beneficiary thereunder, and such agreement shall set out the terms and conditions of such a subordination, if any. If no such subordination exists, the agreement creating the residential ground rent shall prominently state that no such subordination is involved in the agreement; and
(10) Any agreement executed pursuant to the terms of this chapter shall not be valid or enforceable unless the following sentences are prominently displayed on the first page and a signatory page thereof:
- “This agreement is executed pursuant to the terms and conditions of the Tennessee Residential Ground Rent Act, title 66, chapter 30 (the “act”). The terms and conditions of this agreement are governed by and made subject to the act. The act provides that the obligee’s interest in the land is primarily a security interest to protect the obligee’s right to be paid the rent or charge paid for the use of land. If the obligor does not exercise the obligor’s right to redeem the land, the obligee may retain title to the land and the obligor may lose any interest the obligor might have in the land, including improvements, fixtures and equipment located thereon.”