Tennessee Code Tit. § 47-9-334(h) says:
(h) Priority of construction mortgage. A mortgage is a construction mortgage to the extent that it secures an obligation incurred for the construction of an improvement on land, including the acquisition cost of the land, if a recorded record of the mortgage so indicates. Except as otherwise provided in subsections (e) and (f), a security interest in fixtures is subordinate to a construction mortgage if a record of the mortgage is recorded before the goods become fixtures and the goods become fixtures before the completion of the construction. A mortgage has this priority to the same extent as a construction mortgage to the extent that it is given to refinance a construction mortgage.
To better comply with this Code, and to more explicitly subordinate the security interests in fixtures to the construction mortgage, we are dynamically inserting language below the “Deed of Trust” title for all generic Tennessee security instruments that reads:
THIS IS A “CONSTRUCTION MORTGAGE” AS DEFINED IN SECTION 47-9-334(h) TENNESSEE CODE ANNOTATED OR A REFINANCE OF A “CONSTRUCTION MORTGAGE”.
This notice will only be triggered when the loan is a:
- “Construction Only” or “Construction-to-Permanent” loan; or
- cash-out refinance that includes improvements to be made to the property; or
- refinance of a loan that was a “Construction Only” or “Construction-to-Permanent” loan
The new document code for the construction notice will be applied to the following Tennessee security instruments:
- TN Deed of Trust (Cx351)
- TN Deed of Trust Second (Cx509)
- HELOC Deed of Trust – TN (Cx1389)
- FHA TN Deed of Trust (Cx19400)
These changes will be in effect on April 26, 2018. If you have any questions or concerns about these changes, please contact Client Support at 1.800.497.3584.
DR 259215