68-212-403 - Indicia of ownership after foreclosure. - Tennessee Statutes

68-212-403. Indicia of ownership after foreclosure.

(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.

(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, 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, 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 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 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 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.

[Acts 1995, ch. 375, § 6.]