Tennessee Gov. Bill Haslam signed a bill that makes it a crime for someone to file a lien on property without reasonable basis for doing so.
The new law, introduced as SB 2890, was sponsored by Sen. Brian Kelsey.
The new law states that it is an office for any person to knowingly prepare, sign or file any lien or other document with the intent to encumber real or personal property when the person has no reasonable basis or legal cause to place the lien or encumbrance on the property.
Upon conviction of such an office, any court exercising circuit court jurisdiction may order the removal from any record the lien or document evidencing an encumbrance, and order that the document be void and of no legal effect and, if so order, the court must cause the removal of any cloud on a title that may have arisen because of the document.
The new law does not apply to:
- A licensed attorney who prepares a document in the course of representation of a client;
- A financial institution regulated by the Tennessee Department of Financial Institutions, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Farm Credit Administration or the National Credit Union Administration, qualified commercial financing entity, or an employee or agent of any of those entitles, who prepares, signs or files a lien or other document in the ordinary course of business;
- A title insurance company or agent who prepares, signs or files a lien or other document in the ordinary course of business; or
- A real estate licensee.
The act will take effect July 1.