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Frequently Asked Questions about Disclosure of Impact Fees and Adequate Facilities Taxes

What types of property does Tenn. Code Ann. § 66-5-211 apply to?

According to Tenn. Code Ann. § 66-5-201, the Tennessee Residential Property Condition Disclosure Act (“TRPCDA”) applies to “transfers by sale, exchange, installment land sales contract or lease with option to buy residential real property consisting of not less than one (1) nor more than four (4) dwelling units, including site-built and nonsite-built homes, whether or not the transaction is consummated with the assistance of a licensed real estate broker or salesperson.” Therefore, Tenn. Code Ann. § 66-5-211 applies to the first sale of one to four dwelling units, regardless of whether the dwelling units are site-built or nonsite-built.

What is my responsibility as a real estate licensee with regard to the disclosure required by § 66-5-211?

Tenn. Code Ann. § 66-5-206 sets forth the duties of real estate licensees under the TRPCDA. This section provides that a licensee representing an owner of residential real property as the listing broker has a duty to inform that owner of the owner’s rights and obligations under the TRPCDA. A licensee representing a purchaser of residential real property or, if the purchaser is unrepresented, the licensee representing the owner and dealing with the purchaser has a duty to inform the purchaser of the purchaser’s rights and obligations under the TRPCDA.

In accordance with Tenn. Code Ann. § 66-5-206, a licensee acting as the listing broker for the first sale of a dwelling must inform the owner of his/her duty under Tenn. Code Ann. § 66-5-211 to furnish the purchaser with a statement disclosing the amount of any impact fees or adequate facilities taxes paid to any city or county, regardless of whether the subject property is transferred by sale, exchange, installment land sales contract, or lease with an option to buy. The licensee acting as the listing broker should make sure that the owner completes a disclosure statement and that the statement is provided to the purchaser.

A licensee representing a purchaser of a dwelling covered by Tenn. Code Ann. § 66-5-211 must inform the purchaser of his/her right to receive a statement disclosing the amount of any impact fees or adequate facilities taxes paid to any city or county. A licensee representing an owner who deals with an unrepresented purchaser of a dwelling covered by Tenn. Code Ann. § 66-5-211 must also inform the purchaser of his/her right to receive the aforementioned statement. In either of these situations, the licensee should make sure that the purchaser receives the disclosure statement completed by the owner.

How do I find out if Adequate Facilities Taxes or Impact Fees have been paid on a particular piece of property?

The builder, developer, and/or owner should have this information. Most likely, these taxes were levied at the time the building permit(s) was obtained. However, if the builder, developer, and/or owner is unsure as to whether Adequate Facilities Taxes or Impact Fees have been levied and paid on the property, you should advise the builder, developer, or owner to contact the appropriate city or county department and request documentation of the taxes or fees levied and the record of payment.

If no Adequate Facilities Taxes or Impact Fees have been paid on a particular piece of property, does the owner still need to prepare a statement disclosing that no such taxes or fees have been paid?

Yes, even if no taxes or fees have been paid to a city or county with regard to a particular property, the owner of that property must still provide the purchaser with the disclosure. The disclosure should simply indicate that $0 has been paid.

Is there a form the owner can use for making the disclosure required by § 66-5-211?

Yes. TAR has created a new form just for this purpose, F83 Impact Fees Or Adequate Facilities Tax Disclosure.

I was unaware that this Amendment had gone into effect. What if a disclosure statement should have been provided pursuant to § 66-5-211 but the closing has already occurred?

Fortunately, § 66-5-211 does not provide a deadline by which the disclosure must be provided. In the event a disclosure statement should have been provided but was not, it is not too late to remedy that omission. If you represented the owner, you should explain to him his/her duty under Tenn. Code Ann. § 66-5-211 to furnish the purchaser with a statement disclosing the amount of any impact fees or adequate facilities taxes paid to any city or county. You should then make sure that this disclosure is completed and provided to the purchaser. If you represented the purchaser, you should contact the listing broker or the owner if he/she was unrepresented and obtain the disclosure so that you can provide it to the purchaser.