§ 66-32-128 — Protection of nondefaulting purchasers

The developer whose project is subject to an underlying blanket lien or encumbrance shall protect nondefaulting purchasers from foreclosure by the lienholder by obtaining from the lienholder a nondisturbance clause, subordination agreement or partial release of the lien as the time-share intervals are sold. In the alternative, the developer may obtain the agreement of the lienholder to take the project, in the event of default by the developer, subject to the rights of the nondefaulting purchasers by posting a bond, equal to fifty percent (50%) of the amount owed to the lienholder, making an assignment of receivables equal to one hundred twenty-five percent (125%) of the principal amounts due to the lienholder, pledging collateral security equal to one hundred percent (100%) of the amount owed to the lienholder or entering into any other financing plan or escrow agreement acceptable to the lienholder.

Legislative History

Acts 1981, ch. 372, § 29; T.C.A., § 64-3229.