INSTRUCTIONS FOR USING THE INTERPLEADER STATUTE FOR
TENNESSEE COUNTIES OTHER THAN KNOX COUNTY
When a Principal Broker ( hereinafter called “Broker”) has acted to represent one or both parties in a real estate transaction. In the course of the transaction the buyer has given the Broker earnest money to deposit in the Firm’s escrow account. For some reason or another, the deal falls through. The buyer is now demanding that his earnest money be returned by the Broker and at the same time, the seller is demanding the earnest money be forwarded to him. The Broker is now in the middle of this situation and in a quandary as to what to do. If the money is disbursed to the wrong party then there may be liability on the part of the Broker to pay the other party if a court determines that the other party is entitled to the money.
The Broker holding a disputed deposit in escrow should file the Interpleader Form and a copy of the real estate sales contract together with the filing fee at the County’s General Sessions Court Clerk's Office. The original of the Interpleader Form plus one copy for each defendant is filed with the General Sessions Court Clerk ( 5 copies ). The Clerk's staff will issue a summons to both the buyer and the seller and the Sheriff will assign a court date and time indicating when the trial will be held. The Sheriff will then serve the summonses on the buyer and the seller commanding them to appear on that date. The Sheriff should notify the Broker when to attend the trial in the event the Judge has questions regarding the dispute, but if he fails to do so within one week, the Broker should contact the Clerk's Office.
The Broker must pay a filing fee when the Form is filed with the General Sessions Court. A check for the fee should be made payable to "General Sessions Court”. The Broker will need to contact the County’s General Sessions Court Office for the amount of the fee. The fee may vary especially if the buyer and/or seller reside in different counties. These filing fees will be taxed as costs to the losing party and should be reimbursed to the Broker. However, reimbursement is not automatic, the broker must request it.
The Broker must deposit the disputed earnest money with the court.
THE INTERPLEADER FORM
1. At the top of the form type in the Name of the County on the line in front of the word " . County, Tennessee."
2. On the line above the Plaintiff, list the Firm's Name vs.
3. The First Defendant should be the Buyer then a comma,
4. The Second Defendant should be the Seller.
5. The General Sessions Court Clerk will assign a number to the petition and fill it in at the time it is filed.
6. At the top of the petition, under the State of Tennessee, you will find the words “County of ". Fill in the Name of the County on that line.
7.
On the next line fill in the Name of Principal Broker of the Firm who
is "being duly
sworn."
8. In Section I - Fill in the Name of the First Defendant, his Residence and Mailing Address.
9.
In Section II - Fill in the Name of the Second Defendant, his Residence
and Mailing
Address.
[ In both situations, the mailing address can be the same as the residential address.]
10. In Section III - Fill in the Amount of the Money that being held in escrow. Directly under the Amount of Money where it says "held according to the following" - explain that the money is held pursuant to a contract between the First Defendant and the Second Defendant. Also, state as follows: "a copy of the contract between the parties is hereto attached." Then, staple a copy of the sales contract to the petition.
11.
In Section IV - use the language exactly as it is listed in this section
of
the petition.
12.
In Section V - Recite the Amount
of Money paid into the court. This should be the
same amount as listed in Section III of
the petition. Then, sign Your
Name as the
Plaintiff and have the form notarized.
Have the notary fill in the date, sign their name
and the date their
commission expires.
This will complete the petition. Now complete “The Order for the Court.”
THE ORDER FOR THE COURT FORM
At the same time
the Interpleader Form is filed ( with the contract as an addendum ) an
"Order For The Court” to sign must also be filed.
The blanks on this form will be completed by the General Sessions Judge.
Both Forms, the
Interpleader Form” and the "Order For The Court Form" should be
copied with one Form on the “front” and the other Form on the “back” of
a single page.
When this is completed, the "Order For The Court" will be issued and the petition will be served on both the buyer and the seller.
If a General Sessions Court Clerk is not familiar with the Interpleader Form and procedure. Refer them to Tennessee Statute and the Rules of the Tennessee Real Estate Commission as authority to file the petition.
TREC RULE
1260-2-.34 INTERPLEADER.
“Actions in the nature of Interpleader,
in which the value of money
which is the subject of the action does not exceed the jurisdictional limit of
General Sessions Court, may be filed in General Sessions Court pursuant to T.C.A.
16-15-731.“
INTERPLEADER
DEFINITION: A legal proceeding whereby an innocent third party (stakeholder), such
as an escrow agent or broker, can deposit with the court property or money that
he or she holds and that is subject to adverse claims so that the court can
distribute it to the rightful claimant. The distribution of deposit or earnest
money held in escrow is often a problem when the buyer and seller are in dispute
over the purchase contract. If the escrow agent cannot get the parties to agree
an the disposition of the deposit money, the recourse is to file an interpleader action asking the
court to accept the money and distribute it to the rightful claimant.
When the broker is holding the earnest money, the broker may originate
the interpleader.