Tennessee Senate Bill SB0394

Tennessee 2025-2026 Regular Session

• Introduced: 1/28/25
• Chaptered: 4/27/26
• Passed: 4/27/26

Caption

AN ACT to amend Tennessee Code Annotated, Title 56, Chapter 35 and Title 66, relative to real property transactions.

Summary

This bill regulates certain title insurance and settlement practices in Tennessee real estate transactions. It requires written disclosure and signed acknowledgment when two title insurance agencies agree to share premiums, commissions, or other fees paid by the buyer and seller. It also prohibits a participating title insurance agency from implying that it assumes or guarantees liability for a policy it did not issue, and makes clear that no agency is required to enter into such a fee-sharing arrangement. The bill further provides that, in covered residential real property transactions involving one- to four-unit dwellings, the settlement agency named in the purchase contract for the buyer or borrower is the exclusive title insurance issuing agency, subject to any approval rights of a mortgage lender, mortgage loan broker, or mortgage loan servicer. This rule cannot be waived or modified by the parties. The bill excludes first-time sales of new construction and sales by auction, and it takes effect July 1, 2026.

Impact

The bill amends Tennessee Code Annotated Title 56, Chapter 35 by adding new provisions governing title insurance agencies and settlement agencies in residential real estate transactions, and it affects related real property transaction practices under Title 66. It creates disclosure and acknowledgment requirements for fee-sharing arrangements, limits representations about liability among title insurers, and changes who may act as the issuing title insurance agency in certain residential closings. The practical effect is to standardize title agency selection and increase transparency in covered home purchase and lending transactions.

Sentiment

The available voting history suggests the bill was received favorably, with the Senate Judiciary Committee recommending passage by a unanimous 9-0 vote. No committee transcript is available, but the absence of recorded opposition and the committee vote indicate broad support for the measure. The bill also ultimately passed and was enacted, reinforcing that it was not especially controversial in the legislative process.

Contention

The main points of contention inherent in the bill are the restrictions it places on party choice in title insurance selection and the mandatory nature of the new rule. Title insurance agencies may object to being required to disclose fee-sharing arrangements and to the prohibition on waiving or modifying the exclusive-selection rule. Mortgage lenders, brokers, and servicers retain approval rights, so their role in the transaction remains relevant, but the bill limits the ability of buyers, sellers, and other parties to contract around the designated settlement agency requirement. The bill’s exceptions for new construction and auctions suggest lawmakers were balancing consumer-protection concerns with flexibility for certain transaction types.