Each state has its own rules that shape how real estate transactions are handled, and some cities tack on additional guidelines. The following details can help you understand what you’ll encounter as you begin searching for a home in Nashville.
What must sellers disclose? Tennessee state law mandates that most sellers of residential real estate complete a full disclosure statement to let potential buyers know about the condition of their property. This statement needs to include a list of amenities the home has, any known defects or malfunctions of the home, any structural or mechanical problems, environmental hazards and more. Failure to disclose mandated items can result in the cancellation of the sales contract and can even serve as the basis for a lawsuit.
How does foreclosure work? For the most part, foreclosures can work one of two ways. They can be handled through the courts in what is known as a judicial foreclosure or they can be handled outside the courts by a designated trustee in what is called a non-judicial foreclosure. The state of Tennessee allows both judicial and non-judicial foreclosures, meaning repossession of your property due to nonpayment can work either way.
How is property divided in divorce? Tennessee is an equitable distribution state, meaning separate property is not considered marital property in the event of divorce. Generally speaking, this means that property that couples cannot agree upon will be divided equitably by the court system, but not necessarily 50/50. The court will consider various factors to determine an equitable split, such as the duration of the marriage, the employability of both partners, future income potential and the tax consequences for each party upon splitting up assets, among other factors.
Does a lawyer need to be present during a home closing? Some states require an attorney to be present in order to execute a home closing. In Tennessee, however, you can use an attorney but you don’t have to. Tennessee is an escrow state, meaning you can work with an escrow agent to complete the home sale and work through all the details that are required.
Many states charge a real estate transfer tax for each home sale that takes place. Tennessee is no exception, as each home sale will incur a tax equal to 0.37% per $100 spent — or 37 cents for each $100 of your home’s sale price. For reference, however, note that mortgage lenders are responsible for properly disclosing the exact amount of transfer taxes if they are applicable.
Davidson County, where Nashville is located, reported median property taxes of $1,587 on a home worth $164,700 in 2019, according to Tax-Rates.org. This is one of the higher median tax rates in the country, and it is significantly higher than the median property tax rate of $933 across Tennessee.
Property tax relief is available to certain Tennessee residents who meet eligibility requirements, although the amount of relief depends on the value of their property and the county they live in. Relief is generally available to senior citizens, disabled homeowners, disabled veterans and widowers of disabled veterans who meet income requirements.
You can find more information about property tax exemptions in Tennessee here.
Conforming loan limits
Davidson County, where Nashville is located, has a conforming loan limit of $534,750. This is higher than the conforming loan limit across most of Tennessee, which adheres to the typical conforming loan limit of $484,350 for single-family homes.
Conforming loans are mortgages that follow a strict set of guidelines set forth by Fannie Mae and Freddie Mac, both of which are government-sponsored entities. These guidelines include national conforming loan limits, although these can vary by county within each individual state.