Tennessee § 66-34-205 - Sums intended as payment to be held in trust.

§ 66-34-205. Sums intended as payment to be held in trust.

Any sums allocated by the owner or provided or committed to the owner by a third party that are intended to be used as payment for improvements made to real property by virtue of a written contract between the owner and the prime contractor must be held by the owner or third party in trust for the benefit and use of the prime contractor and its remote contractors, and are subject to all legal and equitable remedies. The presence of an otherwise valid agreement to arbitrate does not prevent a prime contractor or remote contractor from seeking equitable relief, including injunctive relief, as permitted by § 66-34-602 against any owner, prime contractor, or remote contractor. The bankruptcy or insolvency of any party is not a valid defense for the failure of an owner or other third party that controls or holds those sums described in subsection (a), as well as all retainage, to release those sums when they are otherwise due. This section does not apply to the state, including its departments, boards, or commissions, or to any institution of higher education. Acts 1991, ch. 45, § 1; 2020, ch. 749, § 22. Compiler's Notes. Acts 2020, ch. 749, § 42 provided that the act, which amended this section, applies to actions occurring and contracts entered into, amended, or renewed on or after July 1, 2020. Amendments. The 2020 amendment, in (a), inserted “prime” twice and substituted “its remote contractors, and are subject” for “shall be subject”; added (b) and (c); and redesignated former (b) as present (d). Effective Dates. Acts 2020, ch. 749, § 42. July 1, 2020.