Protecting Your Property against Lien Claims in Tennessee with a Notice of Completion

Property owners must vigilantly protect against lien claims, especially from a lower-tiered claimant with whom they may not have directly contracted, or even been aware of their participation on the job for which the claim arose.

Tennessee's Property Code 66-11-143(a) offers a tool for this purpose. The owner or purchaser of improved real property, or their agent or attorney may, upon the completion of the improvement, record a Notice of Completion in the office of the register of deeds in the county where the real property is located. The owner or purchaser may also require a person or organization with whom the owner or purchaser has contracted for the improvement to record a notice of completion as well, upon the completion of the improvement. Id.

Along with recording, the owner or purchaser of improved real property or any other authorized party must simultaneously serve a copy of the notice of completion recorded with the register of deeds on the prime contractor and any other entitled parties. Id. Otherwise, the lien rights of the prime contractor who is not served a copy shall not be affected by the notice of completion. Id. The point of this is to make sure all relevant parties understand the status of their lien rights.

Service should be accomplished by registered or certified mail that allows for a return receipt. However, the notice requirement does not apply when the owner, or an entity controlled by the owner, also acts as the general contractor, in furtherance of the improvement to the property. Id.

The notice of completion contains: (1) The legal name of the owner or owners of the real property; (2) The name of the prime contractor or prime contractors; (3) The location and description of the real property; (4) Date of the completion of the improvement; (5) A statement that a transfer of ownership of all or a part of the real property or an interest in the real property and encumbrance on the real property, or a settlement of the claims of parties entitled to the benefits of this part, will take place not less than ten (10) days after the date of the recording of the notice of completion; provided, that the ten-day expiration for lien claimants shall only apply to contracts for improvement to or on real property, for one-family, two-family, three-family and four-family residential units. On all other contracts for improvement to or on real property, the expiration time for lien claimants shall be thirty (30) days after the date of the recording of the notice of completion in the register's office; (6) The name and address of the person, firm, or organization on which parties entitled to the benefits of this chapter may serve notice of claim; (7) Acknowledgment by the person filing the notice, or by that person's agent or attorney; and (8) The name and address of the preparer of the instrument in compliance with Tenn. Prop. Code 66-24-115. Tenn. Prop Code 66-11-143(b).

The register of deeds shall make a permanent record of all notices of completion filed in the office of the register and the records shall be available for public examination. Tenn. Prop Code 66-11-143(c). The register of deeds is also entitled to the fees for the register's services in receiving and maintaining notices of completion. Id. Check with the local office where the notice will be filed to inquire about any fees.

If a remote contractor has served a required notice of nonpayment pursuant to 66-11-145, then any party recording a notice of completion shall simultaneously serve a copy of the notice on the remote contractor. Tenn. Prop Code 66-11-143(d). The remote contractor shall have thirty (30) days from the date of the recording of the notice of completion to serve a written notice in response. Id. The lien rights of a remote contractor who has not been served a copy, shall not be affected by the notice of completion. Id.

Any prime contractor or remote contractor claiming a lien on the property described in the notice of completion, who has not previously registered the person's contract as provided in 66-11-111, or registered a sworn statement as provided in 66-11-112 and served a copy of the registration to the owner, shall serve written notice, to the person, firm or organization and at the address designated for receiving notice of claim, stating the amount of the claim and certifying that the claim does not include any amount owed to the claimant on any other job or under any other contract. Tenn. Prop Code 66-11-143(e)(1).

For improvements to or on real property for one-family, two-family, three-family and four-family residential units, the written notice shall be served not more than ten (10) days from the date of the recording of the notice of completion in the register's office. If the notice is not served within that time, the lien rights of the claimant shall expire. Tenn. Prop Code 66-11-143(e)(2)(A). For all other contracts for improvements to or on real property, the written notice shall be served not more than thirty (30) days from the date of the recording of the notice of completion in the register's office, and if notice is not served within that time, the lien rights of the claimant shall expire. Tenn. Prop Code 66-11-143(e)(2)(B).

The notice is only effective after completion has occurred. Any notice of completion recorded before the completion of the improvement or the demolition is void and of no effect whatsoever. Tenn. Prop Code 66-11-143(f).

This article is provided for informational purposes only and should not be considered legal advice or relied upon as any substitute for speaking with an attorney. Please consult a Tennessee attorney familiar with construction law for any issues regarding mechanic's liens.

Back to Tennessee