New TN Law Involving Septic Systems

Dear Real Estate Professional:

Septic systems are rarely the choice for polite conversation. However, there is new legislation in Tennessee that deals with an old and often repeated problem: more bedrooms than the property’s septic system will allow. Currently my law firm is involved in litigation against two builders/sellers for this exact problem. One of my clients was actually told to “Just sue your realtor, they have money,” instead of suing the culpable party. Any real estate professional must take all reasonable steps to protect themselves against risks, the new law could add new liability to a realtor or broker.

Below is an amendment to the Consumer Protection Act that became effective on July 1, 2006.

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.

SECTION 2. This act shall take effect July 1, 2006, the public welfare requiring it.

Please feel free to contact me if you have any questions and, of course, Happy Halloween!

Sincerely,

Jeff Ward