⚖️ Recent legislative sessions and regulatory shifts in Tennessee have introduced several major updates impacting residential real estate across East Tennessee. These stem from statewide statutory changes, local zoning shifts, and statewide ballot measures.
Key regulatory developments include:
1. Mandatory Wholesaling Disclosures
Tennessee passed new statutory rules regarding real property wholesaling to protect consumers from deceptive practices.
Required Disclosures: Buyers engaging in wholesale deals (contracting to buy property and then assigning the contract/equitable interest to an end buyer for a mark up) must explicitly disclose:
1. The nature of their equitable interest to subsequent buyers (confirming they are not the legal title holder).
2. Their intent to market their equitable interest prior to closing.
3. The effective date of any assignment at least 3 business days prior to execution.
Enforcement: The legislation carries a two year statute of limitations for non compliance claims.
2. Property Assessment & Classification Reform
Advocacy efforts (led by Tennessee REALTORS®) have focused on adjusting how single family rental properties are classified for property tax purposes.
The Issue: Historically, state constitutional language assessed properties with any rental units at a commercial rate (40%) rather than a residential rate (25%), even for single family homes rented out to tenants.
Statewide Push: Legislative clarification aims to ensure that single family, single rental unit residences retain the 25% residential tax assessment rate, preventing massive tax spikes for landlords and renters.
3. Short Term Rental (STR) & Licensing Updates
Vacation Lodging Service (VLS) Streamlining: Proposed legislative adjustments ease burden on licensed real estate brokers managing short term rentals (14 days or fewer) by waiving additional redundant VLS classroom hours, provided affiliate brokers remain properly supervised by a principal broker.
Local STR Zoning Limits: County and municipal enforcement, especially in tourist corridors like Sevier County (Gatlinburg, Pigeon Forge, Sevierville) and Knox County has tightened.
Unincorporated Sevier County enforces annual permitting and mandatory safety/parking inspections.
Municipalities like Gatlinburg explicitly prohibit tourist rentals in traditional single-family residential districts (e.g., R-1A and R-2A).
4. Constitutional Amendment on State Property Tax
Amendment 2 (Statewide Ballot): Tennessee voters will consider a constitutional amendment explicitly prohibiting the General Assembly from levying a state property tax.
Impact: While the state rate is currently 0%, passing this locks in the prohibition constitutionally (requiring a two thirds legislative vote and public referendum to ever change). Note: This does not impact local county or city property tax structures.
5. Housing Supply Incentives: Starter Home Loan Fund
Starter Home Revolving Loan Fund: Governor Lee allocated $30 million to the Tennessee Housing Development Agency (THDA) to offer 0% interest construction loans to home builders dedicated to constructing affordable starter single-family inventory across the state.
6. Regional MLS Rule Updates (East Tennessee REALTORS®)
For licensed practitioners operating through the East Tennessee REALTORS® Multiple Listing Service:
Clear Cooperation & Entry: Signed listings must be entered into the MLS within 2 business days of seller signature/effective date (with fines starting at $100 for non compliance).
Coming Soon Rules: "Coming Soon" status is limited to a maximum of 5 calendar days with mandatory pre marketing disclosures. Absolutely no showings are allowed during "Coming Soon" status (violators face $500–$1,000 fines for both listing agent and principal broker).
Brandon Stitt
The REAL ESTATE Office
Cell 865-696-2552
Office 865-483-SALE
License 384406
Top Agent - Proverbs 13:22 - Oak Ridge - Oliver Springs - Tennessee
