Insurance Companies, Agents, Brokers, Policies

Plain English Breakdown

The official summary does not provide specific enforcement mechanisms or penalties for non-compliance.

Real Property Transaction Settlement Agent Selection Act

This bill allows buyers and borrowers in real property transactions to choose their settlement agent, sets rules for services these agents can provide, and restricts sellers from forcing specific settlement agents on buyers.

What This Bill Does

• Allows a buyer or borrower in a real estate transaction to pick their own settlement agent, subject to approval by a mortgage lender, broker, or servicer.
• Requires the chosen settlement agent to handle escrow or closing services, act as the title insurance agency, and clear titles according to underwriting rules.
• Prohibits sellers from requiring buyers to use specific settlement agents.
• Does not allow any provisions of this bill to be waived or changed by agreement between parties.
• Prevents selected settlement agents from collecting fees from represented sellers without written consent from the seller's attorney.

Who It Names or Affects

• Buyers and borrowers in real property transactions
• Sellers involved in real estate deals
• Settlement agents providing services for these transactions

Terms To Know

Settlement Agent

A person or entity chosen to handle the financial and legal aspects of a real property transaction, including escrow services and title insurance.

Escrow Services

Financial transactions managed by an impartial third party until all conditions in a contract are met.

Limits and Unknowns

• The bill does not specify what happens if the settlement agent fails to obtain written consent from the seller's attorney before collecting fees.
• It is unclear how this act will be enforced or what penalties might apply for non-compliance.
• The effective date of July 1, 2025, means there could be a delay in implementation.

Official Summary Text

Subject to a right of approval by a mortgage lender, m
ortgage loan broker, or mortgage loan servicer,
when
persons or entities are involved in a real property transaction
in this state
, this bill authorizes a purchaser or borrower in
such
transaction to select the settlement agent in connection with the trans
action. Such selected settlement agent is exclusive
ly
authorized to do all of the following:



To provide escrow or closing services in connection with the transfer of interests in real property or the making of loans secured by interests in real property.



To act as the title insurance agency.



To perform those functions and obtain documentation necessary to clear title for the real property involved in the transaction in accordance with those underwriting rules and standards prescribed by the title insurance company that the settlement agent represents.

This bill prohibits t
he seller in
such
transaction
from
requir
ing
the use of a particular settlement agent by the purchaser in connection to the transaction.
Additionally, t
his bill prohibits the waiver
or modification of all of any of the provisions
above
. However, this bill does not prohibit a seller from retaining an attorney to represent the seller's best interests and provide legal advice pertaining to escrow or closing services
as long as such repr
esentation is limited to
deed preparation, fee negotiation, review and signing of applicable closing documents, and advising the seller on legal matters related to the escrow or closing process.

This bill prohibits t
he
selected
settlement agent
from
co
llect
ing
any fees from a represented seller payable to the settlement agent or its subsidiaries, affiliates, or subcontractors, other than those fees and reasonable charges related to the clearing of title, without first obtaining the written consent of th
e seller's attorney.

Current Bill Text

<BillNo> <Sponsor>

HOUSE BILL 137
By Barrett

HB0137
001189
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 56,
Chapter 35 and Title 66, relative to real property
transactions.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 56, Chapter 35, Part 1, is amended by
adding the following as a new, appropriately numbered section:
(a) As used in this section:
(1) "Mortgage lender" has the same meaning as defined in § 47-32-102;
(2) "Mortgage loan broker" has the same meaning as defined in § 47-
32-102; and
(3) "Mortgage loan servicer" has the same meaning as defined in § 47-
32-102.
(b) Subject to any right of approval by a mortgage lender, mortgage loan
broker, or mortgage loan servicer, where those persons or entities are involved in a real
property transaction, a purchaser or borrower in a real property transaction in this state
has the exclusive right to select the settlement agent in connection with the transaction.
The selected settlement agent is exclusively authorized:
(1) To provide escrow or closing services in connection with the transfer
of interests in real property or the making of loans secured by interests in real
property;
(2) To act as the title insurance agency; and
(3) To perform those functions and obtain documentation necessary to
clear title for the real property involved in the transaction in accordance with

- 2 - 001189

those underwriting rules and standards prescribed by the title insurance
company that the settlement agent represents.
(c) The seller in a real property transaction in this state shall not require the use
of a particular settlement agent by the purchaser in connection to the transaction.
(d) The provisions in subsections (b) and (c) may not be waived or modified by a
party to a transaction.
(e) This section does not prohibit a seller from retaining an attorney licensed
pursuant to § 23-1-104 to represent the seller's interests and provide legal advice
pertaining to escrow or closing services. Representation must be limited to deed
preparation, fee negotiation, review and signing of applicable closing documents, and
advising the seller on legal matters related to the escrow or closing process. The
settlement agent chosen pursuant to subsection (b) shall not collect any fees from a
represented seller payable to the settlement agent or its subsidiaries, affiliates, or
subcontractors, other than those fees and reasonable charges related to the clearing of
title, without first obtaining the written consent of the seller's attorney.
SECTION 2. This act takes effect on July 1, 2025, the public welfare requiring it.