Official Summary Text
Present law authorizes courts to appoint receivers for the safekeeping, management, and disposition of property in litigation within such courts. A "receiver" is a person appointed by the court as the court's agent to take possession of, manage, and, if
authorized, transfer, sell, lease, license, exchange, collect, or otherwise dispose of receivership property.
This bill prohibits a receivership proceeding from interfering with the rights of a holder of an interest in a receivership property if the holder's interest is superior to that of the party initiating the receivership, without the express consent of the
superior interest holder. This bill further prohibits a judge or chancellor from limiting, impeding, or enjoining the rights of a holder of an interest in a receivership property if the holder's interest is superior to that of the party initiating the r
ec
eivership. This bill clarifies that a superior interest holder's actions to establish or enforce a priority interest do not constitute consent to a receivership.
DEFINITION OF SUPERIOR INTEREST
This bill defines "superior" as an interest that has priority over other interests in the same property under state law. This includes, but is not limited to, all of the following:
The interest of the holder or beneficiary of a prior recorded deed of trust, security instrument, or other instrument evidencing an interest in the same property, is superior to the interest of a holder, beneficiary, or owner of a later recorded deed of trust or other security instrument, or other instrument evidencing an interest in the same property
.
The interest of the holder or beneficiary of a prior-filed Uniform Commercial Code financing statement is superior to the interest of a later-filed Uniform Commercial Code financing statement in the same property
.
The interest of the holder or beneficiary of any recorded deed of trust, financing statement, other security instrument, or other instrument evidencing an interest in the same property, is superior to the interest in the same property of a person, including the person's heirs, successors, and assigns, who made or granted the deed of trust, financing statement, or other security instrument, or against whom the instrument is asserted
.
JURISDICTION
Present law grants the court that appoints a receiver exclusive jurisdiction to direct the receiver and to determine any controversy related to the receivership or receivership property. This bill clarifies that establishing exclusive jurisdiction over
the receivership or receivership property does not supersede or defeat any enforceable venue, jurisdiction, or choice of law agreement of the party whose interest in the property subject to the receivership is superior to that of the party initiating the
re
ceivership.
STAYS AND INJUNCTIONS
Present law provides that an order appointing a receiver operates as a stay of an act, action, or proceeding (i) to obtain possession of, exercise control over, or enforce a judgment against receivership property; and (ii) to enforce a lien against receiv
ership property to the extent the lien secures a claim against the owners that arose before entry of the order. The court may enjoin an act, action, or proceeding against or relating to receivership property if the injunction is necessary to protect the
pr
operty or facilitate administration of the receivership. This bill provides that any order appointing a receiver or any order to enjoin an act, action, or proceeding against or relating to receivership property, does not operate as a stay or injunction o
f an act, action, or proceeding to
enforce or exercise the rights of an interest holder in property subject to a receivership that is superior to the interest of the party initiating the receivership proceeding.
INTERVENTION IN A RECEIVERSHIP ACTION BY A SUPERIOR INTEREST HOLDER
This bill prohibits a judge or chancellor from
issu
ing
an order that limits, impedes, or enjoins the rights of an interest holder in property subject to a receivership that is superior to the interest of the party initiating the receivership proceeding.
This bill clarifies that, in the event a party elects to intervene in a receivership proceeding so that the court may determine the priority of the superior interest of the property subject to the receivership proceeding, such intervention is not consen
t t
o the receivership. If the court determines that the interest of the intervening party is superior to the interest of the party initiating the receivership, this bill provides that the court adhere to the following:
Must
not issue an order or take action to limit, impede, or enjoin the rights of an interest holder in property subject to a receivership that is superior to the interest of the party initiating the receivership proceeding
.
Must
award the intervening party holding the superior interest reasonable attorney's fees and costs incurred in seeking the determination.
Current Bill Text
Read the full stored bill text
HOUSE BILL 1915
By Boyd
SENATE BILL 1791
By Reeves
SB1791
010911
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AN ACT to amend Tennessee Code Annotated, Title 29,
relative to rights of superior interest holders
subject to receivership proceedings.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 29-1-103, is amended by designating
the existing language as subsection (a) and adding the following as subsection (b):
(b) Notwithstanding subsection (a), a receivership proceeding initiated in this
state must not interfere with, and a judge or chancellor shall not limit, impede, or enjoin,
the rights of a holder of an interest in receivership property if the holder's interest is
superior, as defined in § 29-40-102, to that of the party initiating the receivership, absent
the express consent of the superior interest holder. A superior interest holder's actions
to establish or enforce a priority interest do not constitute consent to a receivership.
SECTION 2. Tennessee Code Annotated, Section 29-40-102, is amended by adding
the following new subdivision:
( ) "Superior" means an interest that has priority over other interests in the same
property under state law, including, but not limited to:
(A) The interest of the holder or beneficiary of a prior recorded deed of
trust, security instrument, or other instrument evidencing an interest in the same
property, is superior to the interest of a holder, beneficiary, or owner of a later
recorded deed of trust or other security instrument, or other instrument
evidencing an interest in the same property;
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(B) The interest of the holder or beneficiary of a prior-filed Uniform
Commercial Code financing statement is superior to the interest of a later-filed
Uniform Commercial Code financing statement in the same property; and
(C) The interest of the holder or beneficiary of any recorded deed of trust,
financing statement, other security instrument, or other instrument evidencing an
interest in the same property, is superior to the interest in the same property of a
person, including the person's heirs, successors, and assigns, who made or
granted the deed of trust, financing statement, or other security instrument, or
against whom the instrument is asserted;
SECTION 3. Tennessee Code Annotated, Section 29-40-105, is amended by
designating the existing language as subsection (a) and adding the following as subsection (b):
(b) Notwithstanding subsection (a), establishing exclusive jurisdiction does not
supersede or defeat any enforceable venue, jurisdiction, or choice of law agreement of
the party whose interest in the property subject to receivership is superior to that of the
party initiating the receivership.
SECTION 4. Tennessee Code Annotated, Section 29-40-114(d), is amended by adding
the following as a new subdivision:
(6) An act, action, or proceeding to enforce or exercise the rights of an interest
holder in property subject to a receivership that is superior to the interest of the party
initiating the receivership proceeding.
SECTION 5. Tennessee Code Annotated, Section 29-40-114, is amended by adding
the following as new subsections:
(g) A judge or chancellor shall not issue an order that limits, impedes, or enjoins
the rights of an interest holder in property subject to a receivership that is superior to the
interest of the party initiating the receivership proceeding.
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(h) In the event a party elects to intervene in a receivership proceeding to obtain
a determination by the court of the priority of the superior interest in the property subject
to the receivership proceeding, the election does not constitute consent to the
receivership, and if the court determines that the interest of the intervening party is
superior to the interest of the party initiating the receivership, then:
(1) The court shall not issue an order or take action to limit, impede, or
enjoin the rights of an interest holder in property subject to a receivership that is
superior to the interest of the party initiating the receivership proceeding; and
(2) The court shall award the intervening party holding the superior
interest reasonable attorney's fees and costs incurred in seeking the
determination.
SECTION 6. If any provision of this act or its application to any person or circumstance
is held invalid, then the invalidity does not affect other provisions or applications of the act that
can be given effect without the invalid provision or application, and to that end, the provisions of
this act are severable.
SECTION 7. This act takes effect upon becoming a law, the public welfare requiring it,
and applies to proceedings initiated on or after the effective date.