Tennessee Mechanics’ and Materialmen’s Lien Statute Summary


In Tennessee, like most states, there is a statutory means by which a person or company who provides labor or materials for the improvement of real estate can secure payment for the work or materials.  Tennessee’s mechanics’ or materialmen’s lien statute was overhauled in 2007 to make it easier to understand and more simple; however, the statute remains full of potential pitfalls and rife with deadlines of various types that can be costly for the unwary.  We recommend hiring a commercial real estate attorney to ensure your rights are protected. Although the statutory changes in 2007 require that the statute “be construed and applied liberally to secure the beneficial results, intents, and purposes” of the statute, “strict compliance” with the statute is still required.  Tenn. Code Ann. § 66-11-148; Sequatchie Concrete Co. v. Cutter Labs., 616 S.W.2d 162, 165 (Tenn. 1980).  To have a lien, the claimant must have improved […]

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FDIC D&O Lawsuits Continue in Georgia


In December, I wrote an article about the FDIC’s fervent pursuit of lawsuits against former directors and officers of failed banks in Georgia.  At the time, the FDIC had elected to sue directors and officers at 11 of the approximately 85 banks that have failed in Georgia during this economic downturn.  Since I published that article, the FDIC has continued its onslaught against the directors and officers of failed banks in Georgia by filing 2 additional lawsuits last month. Both lawsuits were filed in the Northern District of Georgia against former directors and officers of First Security National Bank, which was based in Norcross, Georgia, and Rockbridge Commercial Bank, which was based in Atlanta, Georgia.  The complaints against the directors and officers of these banks are substantially similar to the complaint against the directors and officers of Buckhead Community Bank that I discussed previously.  In the case against First Security […]

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What to Expect in a Commercial Real Estate Loan Sale


I’m currently advising a bank client regarding the purchase of a loan secured by distressed retail commercial real estate.  There are numerous reasons lenders decide to buy and sale loans.  Often, sellers are facing liquidity demands, regulatory pressure, lack of experience working out a specific type of distressed asset, or simple portfolio realignment.  Buyers often have excess capital to lend or invest, possess the experience to work out a distressed loan, or simply want to try and get control of the note to attempt to foreclose on the underlying commercial real estate.  Recently, it seems like most sales that I see are regulatory related, as banks are pressured to move underperforming or disfavored industry-specific loans (i.e. homebuilder, retail, leisure) out of their portfolios, sometimes at significant discounts.  Many loan sales occur after the FDIC has seized a lending institution and placed it into receivership.  Loan sales can include pools of […]

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Construction Lending–Do Lenders ever owe a Duty to Ensure Construction Funds are Used Properly?


I can count on one hand the number of times I’ve seen commercial real estate construction projects come in under budget.  It never fails that last minute changes, upgrades, or “surprises” cause costs to be higher than expected.  Most of the time, one’s construction budget has been pre-approved by the lender and all draw requests are made as one progresses from beginning to end of the project.  So what happens if the lender isn’t really paying attention, funds all draw requests, and construction funds run out while the project is only partially completed?  Whose fault is it?  A question raised by this perpetual problem is what obligation, if any, does your lender have to make sure that your project is progressing appropriately and that the money that the lender has provided for the project is being used appropriately or prudently. Recently, the Tennessee Court of Appeals decided a case involving […]

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Tennessee Foreclosure Deficiency Statute; Is 86% the New Magic Number for Calculating Foreclosure Bids?


In response to the thousands of foreclosures of commercial and residential real estate that have taken place across Tennessee over the last few years, the legislature overhauled the Tennessee Deficiency Statute, which governs a lender’s collection of the balance owed by a borrower after foreclosure occurs.  The Tennessee deficiency law, which is codified at Tenn. Code Ann. Section 35-5-118, provides generally as follows: Subsection (a) confirms that Lenders are entitled to deficiency judgments in Tennessee. Sub-section (b) defines a deficiency judgment as “the total amount of indebtedness prior to the sale plus the costs of the foreclosure and sale, less the fair market value of the property at the time of the sale” and codifies the principle that a sale at public auction creates a rebuttable presumption that the sale price of the property is equal to the fair market value of the property at the time of sale. Subsection […]

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