SECTION 1. The provisions of this act shall apply only with respect to transfers by sale, exchange, installment land sales contract or lease with option to by residential real property consisting of not less than one (1) nor more than four (4) dwelling units, whether or not the transaction is consummated with the assistance of a licensed real estate broker or salesperson.

The disclosure statement referenced in Section 2 is not a warranty of any kind by a seller and is not a substitute for inspections either by the individual purchasers or by a professional home inspector. The disclosure required by this act will be provided to potential buyers for their exclusive use and may not be relied upon by purchasers in subsequent transfers from the original purchaser who received the property disclosure. The required disclosure shall be given in good faith by the owner or owners of property that is being transferred and shall be subject to the requirements of this act.

SECTION 2. With regard to transfers described in Section 1 of this act, the owner of the residential property shall furnish to a purchaser one of the following:

A residential property disclosure statement in the form provided in this act regarding the condition of the property, including any material defects known to the owner. Such disclosure form may be as included in this act and must include all items listed on the disclosure form required pursuant to this act. The disclosure form shall contain a notice to prospective purchasers and owners that the prospective purchaser and the owner may wish to obtain professional advice or inspections of the property. The disclosure form shall also contain a notice to purchasers that the information contained in the disclosure is the representations of the owner and is not the representations of the real estate licensee or sales person, if any. The owner shall not be required to undertake or provide any independent investigation or inspection of the property in order to make the disclosure required by this act.

A residential property disclaimer statement stating that the owner makes no representations or warranties as to the condition of the real property or any improvements thereon and the purchaser will be receiving the real property "as is", that is, with all defects which may exist, if any, except as otherwise provided in the real estate purchase contract. A disclaimer statement may only be permitted where the purchaser waives the required disclosure under Section 2, subsection (1). It the purchaser does not waive the required disclosure under the act, the disclosure statement described in Section 2, subsection (1) shall be provided in accordance with the requirements of this act.

SECTION 3. (a) The owner of residential real property subject to this act shall deliver to the purchaser the written disclosure or disclaimer statement, d agreed upon by the purchaser required by this act prior to the acceptance of a real estate purchase contract. For purposes of this act, a "real estate purchase contract" means a contract for the sale, exchange or lease with option to buy of real estate subject to this act and "acceptance" means the full execution of a real estate purchase contract by all parties. The residential property disclaimer statement or residential property disclosure statement may be included in the real estate purchase contract, in an addendum thereto, or in a separate document.

(b) Failure to provide the disclosure or disclaimer statement required by this act shall not permit a purchaser to terminate a real estate purchase contract; however, a purchaser shall not be restricted by this act from bringing such other actions by law or in equity hat are otherwise permitted.

SECTION 4. (a The owner shall not be liable for any error, inaccuracy or omission or any information delivered pursuant to this act if:

The error, inaccuracy or omission was not within the actual knowledge of the owner or was based upon information provided by public agencies or by other persons providing information as specified in subsection (b) that is required to be disclosed pursuant to this act, or the owner reasonably believed the information to be correct; and

The owner was not grossly negligent in obtaining the information from the third party and transmitting it.

The delivery by a public agency or other person, as described in subsection (c) below, of any information required to be disclosed by this act to a prospective purchaser shall be deemed to comply with the requirements of this act and shall relieve the owner of any further duty under this act with respect to that item of information.

(c) The delivery by the owner of a report or opinion prepared by a licensed engineer, land surveyor, geologist, wood destroying insect control expert, contractor other home inspection expert, dealing with matters within the scope of the professional license or expertise, shall satisfy the requirements of subsection (a) if the information is provided to the owner pursuant to request therefor, whether written or oral. In responding to such a request, an expert may indicate, in writing, an understanding that the information provided will be used in fulfilling the requirements of this act and, if so, shall indicate the required disclosure or portions thereof, to which the information being furnished is applicable. Where such a statement is furnished, the expert shall not be responsible for any items of information, or portions thereof, other than those expressly set forth in this statement.

SECTION 5. If information disclosed in accordance with this act is subsequently rendered or discovered to be inaccurate as a result of any act, occurrence, information received, circumstance or agreement subsequent to the delivery of the required disclosures, the inaccuracy resulting therefrom does not constitute a violation of this act. However, at or before closing, the owner shall be required to disclose any material change in the physical condition of the property or certify to the purchaser at closing that the condition of the property is substantially the same as it was when the disclosure form was provided. If, at that time the disclosures were required to be made, an item of information required to be disclosed is unknown or not available to the owner, the owner may state that the information is unknown or may use an approximation of the information, provided the approximation is clearly identified as such, is reasonable, is based on the actual knowledge of the owner and is not used for the purpose of circumventing or evading this act.

SECTION 6. A real estate licensee representing an owner of residential real property as the listing broker has a duty to inform each such owner represented by that licensee of the owner's rights and obligations under this act.

A real estate licensee representing a purchaser of residential real property or, if the purchaser is not represented by a licensee, the real estate licensee representing an owner of residential real estate and dealing with the purchaser has a duty to inform each such purchaser of the purchasers rights and obligations under the act. If a real estate licenses performs those duties, the licensee shall have no further duties to the parties to a residential real estate transaction under this act, and shall not be liable to any party to a residential real estate transaction for a violation of this act or for any failure to disclose any information regarding any real property subject to this act. Provided, however, a cause of action for damages or equitable remedies may be brought against a real estate licensee for intentionally misrepresenting or defrauding a purchaser.

A real estate licensee will further be subject to a cause of action for damages or equitable relief for failing to disclose adverse facts of which the licensee has actual knowledge or notice. "Advers Facts" means conditions or occurrences generally recognized by competent licensees that significantly reduce the structural integrity of improvements to real property, or present a significant health risk to occupants of the property.

SECTION 7. (a) Notwithstanding any of the provision of this act, or any other statute or regulation, no cause of action shall arise against any owner or a real estate licensee for failure to disclose that an occupant of the subject real property, whether or not such real property is subject to this act, was afflicted with human immune deficiency virus (HIV) or other disease which has been determined by medical evidence to be highly unlikely to be transmitted through the occupancy of a dwelling place, or that the real property was the she of:

An act or occurrence which has no affect on the physical structure of the real property, the physical environment or the improvements located thereon; or

A homicide, felony or suicide.

SECTION 8. (a) The purchasers remedies hereunder for an owner's misrepresentation on a residential property disclosure statement shall be either:

An action for actual damages suffered as a result of defects existing in the property as of the date of execution of the real estate purchase contract, provided that the owner has actually presented to a purchaser the disclosure statement required by this act, and of which the purchaser was not aware at the earlier of closing or occupancy by the purchaser, in the event of a sale, or occupancy in the event of a lease with the option to purchase. Any action brought under this subsection shall be commenced within one (1) year from the date the purchaser received the disclosure statement or the date of closing (or occupancy if a lease situation), whichever occurs first; or

In the event of a misrepresentation in any residential property disclosure statement required by this act, termination of the contract prior to closing, subject to the provisions of Section 4 of this act; or

Such other remedies at law or equity otherwise available against an owner in the event of an owner's intentional or willful misrepresentation of the condition of the subject property.

(b) No cause of action may be instituted against an owner of residential real property subject to this act for the owner's failure to provide the disclosure or disclaimer statement required by this act. However, such owner would be subject to any other cause of action available in law or equity against an owner for misrepresentation or failure to disclose material facts regarding the subject property that exists on the effective date of this act.

(c) No cause of action maybe instituted against a closing agent or closing attorney for the failure of an owner to provide the disclaimer or disclosure required by this act or for any misrepresentations made by a seller on the disclosure form supplied to the purchaser pursuant to this act.

(d) The failure of an owner to provide a purchaser the disclosure or disclaimer required by this act shall not have any effect on title to property subject to this act and the presence or absence of such disclosure or disclaimer is not a cloud on title and has no effect on title to such property.

SECTION 9. The following are specifically excluded from the provision of this act:

Transfers pursuant to court order including, but not limited to, transfers ordered by a court in the administration of an estate, transfers pursuant to a writ of execution, transfers by foreclosure sale, transfers by a trustee in bankruptcy, transfers by imminent domain and

transfers resulting from a decree of specific performance.

Transfers to a beneficiary of a deed of trust by a trustor or successor in interest who is in default; transfers by a trustee under a dead of trust pursuant to a foreclosure sale, or transfers by a beneficiary under a dead of trust who has acquired the real property at a sale conducted pursuant to a foreclosure sale under a dead of trust or has acquired the real property by a dead in lieu of foreclosure.

Transfers by a fiduciary in the course of the administration of a descendents estate, guardianship, conservatorship or trust.

Transfers from one or more co-owners solely to one or more co-owners. This provision is intended to apply, and only does apply, in situations where ownership is by a tenancy by the entirety, a joint tenancy or a tenancy in common and the transfer will be made from one or more o the owners to another owner or co-owners holding property either as a joint tenancy, tenancy in common or tenancy by the entirety.

Transfers made solely to any combination of a spouse or a person or persons in the lineal line of consanguinity of one or more of the transferors.

Transfers between spouses resulting from a decree of divorce or a property settlement stipulation.

Transfers made by virtue of the record ownees failure to pay an federal, state or local taxes.

Transfers to or from any governmental entity or public or quasi-public housing authority or agency.

Transfers involving the first sale of a dwelling provided that the builder offers a written warranty.

Any property sold at public auction.

Any transfer or property where the owner has not resided on the property at anytime within (3) years

prior to the date of transfer.

SECTION 10. Following is the form prescribed by the General Assembly which is necessary to comply with the provisions of this act. The form used does not have to be the one included in this section but it is the intent of the General Assembly that any such form includes all items contained in the form below with all acknowledgement provisions of such form:

Tennessee Residential Property Condition Disclosure

Complete this form yourself and answer each question to the best of your knowledge.

THE SELLER OF PROPERTY FOR SALE WITHIN THE STATE OF TENNESSEE MUST PROVIDE DETAILED INFORMATION CONCERNING THE CONDITION OF THE PROPERTY.

For residential property of not less than one nor more than four dwelling units, prior to signing a Real Estate Sales Contract or certain other Agreements, the Seller must provide detailed information concerning the condition of the property, whether or not a Real Estate Agent is involved in the sale. Compliance by a Seller is mandatory.

If a Real Estate Agent is involved in the transaction, the law requires only that the Real Estate Agent inform both the Seller and the Buyer of their responsibilities, rights and obligations under the Law.

The Disclosure Statement is not a warranty and is not intended to be a substitute for an inspection of

the property.

The Disclosure is provided for the Buyer's exclusive use and may not be relied upon by a Buyer in a subsequent transfer. The Disclosure from the Seller must be given in good faith.

The Seller is not required to undertake independent inspections or investigations of the property in order to complete the Disclosure. The Buyer may wish to obtain an Inspection.

The information in the Disclosure is provided by the Seller and not the Real Estate Agent.

The Disclosure may be waived by a Disclaimer, but only if the Buyer agrees.

Failure to provide a Disclaimer will not permit a Buyer to terminate a Real Estate Sales Contract; however, the Buyer may have other remedies.

The Seller is not liable for an error or omission in the Disclosure if:

(1) The error or omission was not within the actual knowledge of the Seller or was based on information provided by a public agency, or the report of an Inspector such as a Professional Home Inspector;

(2) The Seller was not grossly negligent in obtaining the information.

It the Seller subsequently (but before the closing) determines that the information in the Disclosure was inaccurate, the Seller must disclose the inaccuracy to the Buyer. In addition, If there are any material changes in the physical condition of the property between the time the contract is executed and the closing, then an updated Disclosure is required.

At the time of closing, the Seller will be required to provide a statement that no physical changes have occurred in the condition of the property between the time of the execution of the Disclosure and the date of closing.

If at the time the Disclosure is made, the Seller does not have information concerning a certain matter, the seller may state that such information is unknown, or use an approximation of the information, but this provision may not be used for the purpose of evading the purpose of the Law.

The Real Estate Agent must inform potential Buyers of adverse facts concerning the property known to him/her, and can be held liable for intentional misrepresentation or defrauding a Buyer.

Matters such as a person being with HIV or other disease which has been determined by medical evidence to be highly unlikely to be transmitted through occupancy of a residence, or the occurrence at the residence of a homicide, felony or suicide, need not be disclosed.

The Buyer has a cause of action for defects existing at the time of the execution of the Contract, subject to certain limitations. Any action must be brought within one year.

No cause of action may be instituted against a closing agent or attorney for failure of a Seller to provide a Disclosure or Disclaimer.

Failure of a Seller to provide the Disclosure or Disclaimer does not affect the status of the title.

The Law does not affect other remedies otherwise available.

Certain transactions are excluded from the requirements. ( see the Tennessee Property Disclaimer Statement Form )

SECTION 1. Tennessee Code Annotated, Section 47-18-104(b), is amended by adding the following language as a new, appropriately designated subdivision:

(A) Knowingly advertising or marketing for sale a residence as having more bedrooms than are permitted by the residence's subsurface sewage disposal system permit, as defined in Section 68-221-402, unless prior to the execution of any sales agreement the permitted number of bedrooms is disclosed in writing to the buyer.

(B) If a residence is marketed for sale as having more bedrooms than are permitted by the subsurface sewage disposal system permit and no disclosure of the actual number of bedrooms permitted occurs prior to the execution of a sales agreement, then the buyer shall have the right to rescind the sales agreement and may recover treble damages as provided in Section 47-18-109.

(C) A subsurface sewage disposal system permit issued in the name of the owner of the residence shall serve as constructive notice to that owner of the residence and that owner's real estate agent for the purpose of establishing knowledge as to the number of bedrooms of the residence for the purpose of finding a violation of this subdivision.

THE EFFECTIVE DATE OF THIS ACT IS JULY 1, 2006

This Act prohibits "Knowingly" advertising or marketing for sale a residence as having more bedrooms than are permitted by the septic system permit issued by the appropriate governmental permitting authority.

When listing a Seller's property, a Real State licensee must now require the Seller to furnish you as the listing agent with a copy of the Residence's Subsurface Sewage Disposal System Permit. Licensee should not obtain the Permit on their own. This is a requirement of the Seller and Licensees have the right to rely on the PERMIT SUPPLIED BY THE Seller. Remember the Law says that the Licensee and the Seller cannot "Knowingly" make a false statement in marketing or advertising the number of bedrooms allowed by the Residence's Subsurface Sewage Disposal System Permit. A Licensee acting as a listing agent should secure a copy of this permit prior to entering the property into the MLS or taking any other steps to advertise it for sale.

A Licensee representing a Buyer as a Buyer's Agent by contract now has a duty to request that the listing agent or Seller provide the Buyer Client with a copy of the Residence's Subsurface Sewage Disposal System Permit. The Buyer's Agent has a duty to protect the Buyer Client's interest in purchasing the property and to protect the Buyer Client's future ability to resell the property with the same number of bedrooms as advertised when it was purchased by the Buyer. This information must be made available to the Buyer prior to preparing an offer to purchase a property.

Licensees who "Knowingly" misrepresent the number of bedrooms allowed by the Residence's Subsurface Sewage Disposal System Permit will find both themselves and their Broker in a lawsuit. However, there generally could be no cause of action brought against a Licensee and Broker for any negligent or unintentional misrepresentation under the Consumer Protection Act of Tennessee unless the Licensee acted to misrepresent the situation "Knowingly".

USE TAR FORMS F84 "SUBSURFACE SEWAGE DISPOSAL SYSTEM PERMIT DISCLOSURE" AND F85 "EXTERIOR INJECTION WELL, PERCOLATION TEST AND SOIL ABSORPTION RATE DISCLOSURE" FOR THIS ACT

While the amended Act (July 2007) provides that permits are only required for new construction, it is KAAR's strong recommendation that you continue to obtain either F84 or F85 for all listings in your files.

Further, stipulating a total number of bedrooms in an MLS Listing and putting notice in the remarks that the septic permit is for a lesser number of bedrooms indicates and admits your misrepresentation.

An amendment to the Property Condition Disclosure Act

AN ACT to amend Tennessee Code Annotated, Title 66, Chapter 5, relative to residential property disclosures.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:

SECTION 1. Tennessee Code Annotated, Title 66, Chapter 5, Part 2, is amended by adding the following as a new section: Section 66-5-211.

(a) In transfers involving the first sale of a dwelling, the owner of residential property shall furnish to the purchaser a statement disclosing the amount of any impact fees or adequate facilities taxes paid to any city or county on any parcel of land subject to transfer by sale, exchange, installment land sales contract, or lease with an option to buy.

(b) For the purpose of this section, unless the context otherwise requires:

(1) "Adequate facilities tax" means any privilege tax that is a development tax, by whatever name, imposed by a county or city, pursuant to any act of general or local application, on engaging in the act of development;

(2) "Development" means the construction, building, reconstruction, erection, extension, betterment, or improvement of land providing a building or structure of the addition to any building or structure or any part hereof, which provides, adds to, or increases the floor area of a residential or nonresidential use; and

(3) "Impact fee" means a monetary charge imposed by a county or municipal government pursuant to any act of general or local application, to regulate new development on real property. The amount of impact fees are related to the costs resulting from the new development and the revenues for this fee are earmarked for investment in the area of the new development.

SECTION 2. This act shall take effect July 1, 2005, the public welfare requiring it.

Use TAR Form F83 for Disclosure of Impact Fees or Adequate Facilities Taxes

Currently the City of Gatlinburg and Sevier County are the only East Tennessee Jurisdictions that have implemented an Adequate Facilities Tax, Development Tax, and/or Impact Fee that must be reported to consumers:

Currently the City of Maryville in Blount County is the only Local Government in East Tennessee Authorized by Local Acts to Implement Adequate Facilities Taxes and/or Impact Fees as of July 1, 2005

THE TENNESSEE PROPERTY CONDITION DISCLOSURE LAW

A REALTOR® is required by Law to inform a Property Owner Client of his Rights and Obligations under the Property Condition Disclosure Law.

A Property Owner:

ü is required to fill out a Property Condition Disclosure in good faith and to the best of his

personal knowledge and provide to purchasers prior to acceptance an offer to purchase.

ü is not required to fill out a Property Condition Disclosure if the transaction is exempt.

ü may elect to give the Purchaser a Disclaimer Statement in lieu of a Property Condition

Disclosure if the Purchaser will accept it.

ü is not required to personally inspect the property prior to filling out a Property Condition Disclosure.

ü may elect to obtain advice from a Professional or have a professional inspection of his property.

ü has the right to have a qualified property inspector fill out the Property Condition

Disclosure to assist him in avoiding liability for any errors or omissions if the

information is incorrect as to those items completed by a qualified Inspector and he did

not have actual knowledge of the errors or omissions and was not grossly negligent in

obtaining the information from the Inspector.

ü is not required to repair anything disclosed on the Property Disclosure unless he

agrees to do so by contract.

ü is not required to disclose that a property occupant is or was afflicted with HIV or other diseases which have been determined not likely to be transmitted through occupancy of the property.

ü is not required to disclose certain acts or occurrences such as – a homicide, suicide or felony.

ü is required to update the Property Condition Disclosure information during the term of

a listing contract.

ü is required to update the Property Condition Disclosure information by an addendum

at the closing.

TENNESSEE RESIDENTIAL PROPERTY CONDITION LAW

TO: _______________________________________________________________________

( The Purchaser )

FROM: _____________________________________________________________________

( The Seller )

RE: ________________________________________________________________________

( The Property Address )

THE OWNER OF THE PROPERTY ABOVE MAKES NO REPRESENTATION OR WARRANTIES AS TO THE CONDITION OF THE REAL PROPERTY OR ANY IMPROVEMENTS THEREON AND THE PURCHASER WILL BE RECEIVING THE REAL PROPERTY "AS IS", THAT IS, WITH ALL DEFECTS WHICH MAY EXIST, IF ANY, EXCEPT AS OTHERWISE PROVIDED IN THE REAL ESTATE PURCHASE CONTRACT.

THE PURCHASER(S) AS INDICATED BY THEIR SIGNATURE BELOW UNDERSTAND(S) THAT THE TENNESSEE RESIDENTIAL PROPERTY DISCLOSURE ACT STATES THAT ANYONE TRANSFERRING TITLE TO RESIDENTIAL REAL ESTATE PROPERTY MUST PROVIDE INFORMATION ABOUT THE CONDITION OF THE PROPERTY UNLESS UNDER SECTION 2(2) OF THE ACT THE PURCHASER WAIVES THE REQUIRED DISCLOSURE UNDER THE ACT. THE PURCHASERS UNDERSTAND AND ACKNOWLEDGE THAT THEY ARE PURCHASING THE PROPERTY "AS IS" AND THAT NO REQUIRED DISCLOSURES UNDER THE TENNESSEE RESIDENTIAL PROPERTY DISCLOSURE ACT ARE BEING PROVIDED HEREWITH AND THE SAME ARE HEREBY WAIVED BY PURCHASERS.

Executed this ________day of __________________, 2003

Signature of The Purchaser(s): ___________________________________________________

Date Signed: ________________________________

Signature of The Purchaser(s): ___________________________________________________

Date Signed: ________________________________