Owners Can Get Cake and Icing Under New Tennessee Lien Law

Seems like last week I was just celebrating one kid’s birthday and I had to do it again last night! Oh, that’s right, I have seven kids with two birthdays in September. So, it was not a dream?!?!?! Although they both got to choose their own family dinner destination, we are going to have one huge cake this weekend…with tons of icing!

Owners in Tennessee are celebrating a new law recently passed because they may get their icing, too! The new statute, signed into in May 2018, immediately created a cause of action providing for remedies for the successful challenge of the validity of a lien against a property. Under the new law, Tennessee Code Section 66-21-108 provides a description of the “icing” that the owner may recover:

[A] real property owner who prevails in an action challenging the validity of a lien, including in a slander of title proceeding, shall recover:

(1) The owner’s reasonable attorney’s fees;

(2) Reasonable costs incurred by the owner to challenge the validity of the lien;

(3) Liquidated damages in an amount equal to ten percent (10%) of the fair market value of the property not to exceed one hundred thousand dollars ($100,000); and

(4) Any actual damages incurred by the owner.

The banking industry was able to get a carve-out because the above remedies do not apply “if the action was brought to challenge a lien that is based on a loan agreement for which the encumbered property was listed as collateral to secure the repayment of the loan.”

While there were other remedies available to owners under Tennessee’s mechanic’s lien statutes (such as right to bond off enforcement, right to demand enforcement, or exaggeration of lien claims), this new section provides additional remedies in the form of liquidated damages and actual damages.

Original Article