(a) The indicia of ownership, held after foreclosure continues to be maintained primarily as a protection for a security interest; provided, that the holder did not participate in the management prior to foreclosure and its equivalents and that the holder undertakes to sell, re-lease property pursuant to a lease financing transaction (whether by a new lease financing transaction or substitution of the lessee), or otherwise divest itself of site, vessel or facility in a reasonably expeditious manner in accordance with the means and procedures specified in this part. Such a holder may liquidate, maintain business activities and operations, wind up operations, undertake environmental response actions pursuant to state, local, and federal laws, and take measures to preserve, protect or prepare the secured asset prior to sale or other disposition, without losing status as a person who maintains indicia of ownership primarily to protect a security interest pursuant to this chapter.
Terms Used In Tennessee Code 68-212-403
Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
Date of foreclosure: means the date on which the holder obtains legal or equitable title or possession to the site, vessel or facility pursuant to or incident to foreclosure. See Tennessee Code 68-212-401
Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
Facility: means : (A) Any building, structure, installation, equipment, pipe or pipeline (including any pipe into a sewer or publicly owned treatment works), well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft. See Tennessee Code 68-212-401
Fair consideration: means the value of the security interest when calculated as an amount equal to or in excess of the sum of the outstanding principal (or comparable amount in the case of a lease that constitutes a security interest) owed to the holder immediately preceding the acquisition of full title (or possession in the case of property subject to a lease financing transaction) pursuant to foreclosure and its equivalents, plus any unpaid interest, rent or penalties (whether arising before or after foreclosure and its equivalents), plus all reasonable and necessary costs, fees, or other charges incurred by the holder incident to work out, foreclosure and its equivalents, retention, maintaining the business activities of the enterprise, preserving, protecting and preparing the site, vessel or facility prior to sale, re-lease of property held pursuant to a lease financing transaction (whether by a new lease financing transaction or substitution of the lessee) or other disposition, plus response costs incurred under applicable federal, state or local environmental cleanup laws or regulations, or at the direction of an on-scene coordinator, less any amounts received by the holder in connection with a partial disposition of the property, net revenues received as a result of maintaining the business activities of the enterprise, and any amounts paid by the borrower subsequent to the acquisition of full title (or possession in the case of properties subject to lease financing transactions) pursuant to foreclosure and its equivalents. See Tennessee Code 68-212-401
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
foreclosure and its equivalents: means purchase at foreclosure sale, acquisition or assignment of title in lieu of foreclosure, termination of a lease or other repossession, acquisition of a right to title or possession, an agreement in satisfaction of the obligation, or any other formal or informal manner (whether pursuant to law or under warranties, covenants, conditions, representations or promises from the borrower) by which the holder acquires title to or possession of the secured property. See Tennessee Code 68-212-401
Holder: is a person who maintains indicia of ownership primarily to protect a security interest. See Tennessee Code 68-212-401
Indicia of ownership: means evidence of a security interest, evidence of an interest in a security interest, or evidence of an interest in real or personal property securing a loan or other obligation, including any legal or equitable title to real or personal property acquired incident to foreclosure and its equivalents. See Tennessee Code 68-212-401
Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
participate in the management: means actual participation in the management or operational affairs by the holder of the security interest and does not include the mere capacity, or ability to influence, or the unexercised right to control a site, vessel or facility operations. See Tennessee Code 68-212-401
Person: includes a corporation, firm, company or association. See Tennessee Code 1-3-105
Primarily to protect a security interest: means that the holder's indicia of ownership are held primarily for the purpose of securing payment or performance of an obligation, but does not include indicia of ownership held primarily for investment purposes, nor ownership indicia held primarily for purposes other than as a protection of a security interest. See Tennessee Code 68-212-401
Security interest: means an interest in a site, vessel or facility created or established for the purpose of securing a loan or other obligation. See Tennessee Code 68-212-401
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
Vessel: means every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water. See Tennessee Code 68-212-401
written: includes printing, typewriting, engraving, lithography, and any other mode of representing words and letters. See Tennessee Code 1-3-105
(b) For the purposes of establishing that a holder is seeking to sell, re-lease property pursuant to a new lease financing transaction (whether by a new lease financing transaction or substitution of the lessee), or divest itself of a site, vessel or facility in a reasonably expeditious manner, the holder may use whatever commercially reasonable means are relevant or appropriate with respect to the site, vessel or facility, taking all facts and circumstances into consideration, or may employ the means specified in this part.(c)(1) A holder that outbids, rejects or fails to act upon a written bona fide, firm offer of fair consideration within ninety (90) days of receipt of the offer, provided the offer is received at any time after six (6) months following the date of foreclosure and its equivalents, shall not be deemed to be using a commercially reasonable means for the purpose of this part. “Written bona fide, firm offer” means a legally enforceable, commercially reasonable, cash offer solely for the foreclosed site, vessel or facility, including all material terms of the transaction, from a ready, willing, and able purchaser who demonstrates to the holder’s satisfaction the ability to perform. For the purpose of this subsection (c), the six-month period begins to run from the time that the holder acquires a marketable title; provided, that the holder, after the expiration of any redemption or other waiting period provided by law, was acting diligently to acquire marketable title.(2) A holder that outbids, rejects, or fails to act upon an offer of fair consideration for the site, vessel or facility as provided in subdivision (c)(1) establishes that the ownership indicia in a secured property are not held primarily to protect the security interest, unless the holder is required, in order to avoid liability under federal, state or local law, to make a higher bid, to obtain a higher offer, or to seek or obtain an offer in a different manner.(d) A holder establishes that it is proceeding in a commercially reasonable manner after foreclosure by within twelve (12) months following foreclosure and its equivalents, listing the site, vessel or facility with a broker, dealer, or agent who deals with the type of property in question; or by advertising the site, vessel or facility as being for sale or disposition on at least a monthly basis in either a real estate publication or a trade or other publication suitable for the site, vessel or facility in question, or a newspaper of general circulation (defined as one with a circulation over ten thousand (10,000), or one suitable under any applicable federal, state or local rules of court for publication required by court order or rules of civil procedure) covering the area where the property is located. For purposes of this subsection (d), the twelve-month period begins to run from the time that the holder acquires marketable title, provided that the holder, after the expiration of any redemption or other waiting period provided by law, was acting diligently to acquire marketable title.(e)(1) A holder shall sell, re-lease the property held pursuant to a new lease financing transaction, or otherwise divest itself of such site, vessel or facility in a reasonably expeditious manner, but not later than five (5) years after the date of foreclosure or its equivalents, except that a holder may continue to hold the property for a time period longer than five (5) years without losing status as a person who maintains indicia of ownership primarily to protect a security interest if:
(A) The holder has made a good faith effort to sell, re-lease, or otherwise divest itself of the property using commercially reasonable means or other procedures prescribed by this part;(B) The holder has obtained any approval required pursuant to applicable federal, state or local banking or other lending laws to continue its possession of the property; or(C) The holder has exercised reasonable custodial care to prevent or mitigate any new discharges from the site, vessel or facility that could substantially diminish the market value of the property;(2)(A) The exemption granted to holders pursuant to this section shall not apply to the liability for any new discharge from the site, vessel or facility, occurring after the date of foreclosure and its equivalents, that is attributable to acts or omissions of the holder which can be shown, based on a preponderance of the evidence, to have been negligent. In the event a property has both preexisting and new discharges, the liability, if any, allocable to the holder pursuant to this subsection (e) shall be limited to those cleanup costs or damages that relate directly to the new discharge. In the event there is a substantial commingling of new discharge with preexisting discharge, the liability, if any, allocable to the holder pursuant to this subsection (e) shall be limited to the cleanup costs or damages in excess of those cleanup costs or damages relating to a preexisting discharge. In order to establish that a discharge occurred or began prior to the date of foreclosure and its equivalents, a holder may perform, but shall not be required to perform, an environmental audit, site assessment or inspection, in accordance with the assessment standards, to identify such discharges at the site, vessel or facility;(B) Nothing in this subsection (e) shall be deemed to impose liability for a new discharge from the site, vessel or facility that is authorized pursuant to a federal, state or local permit or cleanup procedure;(C) The exemption granted to holders of indicia of ownership primarily to protect a security interest shall not apply to liability, if any, pursuant to applicable laws and regulations, for arranging for the off-site disposal or treatment of a hazardous substance, or by accepting for transportation and disposing of a hazardous substance at an off-site facility selected by the holder, unless pursuant to a remediation plan approved by the appropriate local, state and/or federal authorities.
