All funds received by a dealer in a transaction involving the purchase or trade-in, or both, of a motor vehicle intended by the parties to the transaction to be used to:

(1) Satisfy obligations secured by a lien or other security interest in a motor vehicle or other tangible personal property taken by the dealer as a trade-in in partial or complete consideration for the purchase of a motor vehicle;

Terms Used In Tennessee Code 55-27-102

  • Dealer: means every person engaged in the business of buying, selling or exchanging vehicles of a type required to be registered and who has an established place of business for that purpose in this state. See Tennessee Code 55-8-101
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Vehicle: means every device in, upon or by which any person or property is or may be transported or drawn upon a highway, excepting devices used exclusively upon stationary rails or tracks. See Tennessee Code 55-8-101
(2) Pay to the taxing authorities the sales or use tax collected by the dealer on the sale of a motor vehicle; or
(3) Pay the fees imposed for the transfer of title, registration and licensing of the vehicle;

are trust funds held in trust by the dealer for the benefit of the purchaser and/or the holder of the obligations secured by the lien or other security interest and/or the taxing authorities and registration officials, as their respective interests may appear.

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