Private Speed Bumps

• Tennessee is an UNPAID BALANCE lien state.
• Important Reminder:  Claim amounts are required on all statutorily required NTOs.
• Notification is required when contracting directly with the owner on private projects.
• Residential
  
  • According to Tennessee Code, Title 66, Chapter 11, Section 66-11-146, residential real property is defined as "a building consisting of one (1) dwelling unit in which the owner of the real property intends to reside or resides as the owner's principal place of residence, including improvements to or on the parcel of property where the residential building is located, and also means a building consisting of two (2), three (3) or four (4) dwelling units where the owner of the real property intends to reside or resides in one (1) of the units as the owner's principal place of residence, including improvements to or on the parcel of property where the residential building is located."
  • Those working for someone other than the owner, on residential projects (occupied by the owner as his principal place of residence) consisting of one, two, three or four dwelling units are not entitled to lien rights.
• Nonresidential/Commercial (All other Projects)
  • All private projects in Tennessee, except for owner/occupied Residential projects described above, are subject to liens by contractor, mechanics, laborers, founders or machinists, surveyors, architects and engineers as set out in TCA 66-11-102.
• An owner may file a Notice of Completion preventing lien claims that have not been filed except for the lien rights of the prime contractor. A 10-day expiration for lien claimants applies to contracts for improvement for residential units. On all other contracts for improvement, the expiration for lien claimants within 30 days from the date of the filing of the Notice of Completion.

Notice of Non-Payment (NONP)

• Prompt Payment Act Amended 7/1/20  - After sending NONP “adequate legal reasons” for non-payment must be sent within 10 days to the unpaid party.  Unpaid party may seek injunctive relief, if an “adequate legal reasons” is not received.  Previous law required unpaid party to furnish a bond double the amount claimed before obtaining injunctive relief.  Bond after 7/1/20 must now equal amount of claim.  Arbitration provisions does not prevent a party from seeking injunctive relief. 
• New language per Amended Act of 7/1/20 permits an unpaid party to stop work when payment or adequate legal reasons is not received.   Allowance for an extension of the contract schedule amended. 

Public Speed Bumps

• The Highway Department is required to advertise in the county where the work was completed within 30 days of settlement. The Highway Commissioner is required to withhold, for a period of 60 days after the date of the last advertisement, funds to pay all claims filed. When a claimant brings suit against the contractor within the 60 day period, the Highway Department pays the retained funds to the court, otherwise to the contractor. Actions on bonds furnished under the Highway Code must be commenced after the expiration of 1 year following the date of the first publication of the advertised notice.
• Public officer who fails to obtain the bond is guilty of a misdemeanor. No similar counterpart in Highway Code. The Highway Commissioner is required to withhold, for a period of 60 days after the date of the last advertisement, sufficient funds to pay all claims so filed. If a claimant brings suit against the contractor within such 60-day period, the Highway Department pays such retained fund into court, otherwise to the contractor
• On October 1, 2016 P3 Public-Private Transportation Act of 2016 legislation went into effect which will require performance and payment bonds or other forms of security.