What fees can a Tennessee court clerk charge in a delinquent property tax lawsuit?

Subject

Opinion No. 13-96, Court Clerk's Fees in Delinquent Tax Lawsuits, November 27, 2013

Plain-English summary

Sen. Lowe Finney and Rep. Bill Sanderson asked the AG to walk through what a court clerk (typically the Clerk & Master in chancery) can charge in a delinquent property tax case. The answers, in 2013:

Per-parcel filing fee: $44 per parcel that is included in the suit. Tenn. Code Ann. § 8-21-401(b)(1)(F) sets it at $42, and § 8-21-401(j)(2) added $2 for computer hardware, effective July 1, 2012, for $44 total.

Per-parcel sale fee: $100 for each parcel for which the judge actually issues an order to sell. Tenn. Code Ann. § 8-21-401(b)(1)(F).

Commission on taxes received and paid over: 5% of any property taxes (plus statutory penalties and interest) that the clerk actually collects and pays over. Tenn. Code Ann. § 8-21-401(h)(1). In Shelby County the rate is 10%. § 8-21-401(h)(2). Knox County is excluded from this fee schedule. § 8-21-409.

That's the universe of clerk compensation. Tenn. Code Ann. § 67-5-2506(a)(3) (and the population-bracketed alternative in (b)(3)) directs the distribution of sale proceeds: up to 10% first to unpaid attorney's fees, then court costs, then to county and municipal tax liens. The 10% cap applies only to attorney's fees. § 67-5-2506 does not authorize any additional clerk compensation beyond what § 8-21-401 already provides, and the clerk's $44 plus $100 plus 5%-commission entitlement is the same whether the proceeds end up large or small.

Edge cases:

• If the local government does not bid in the taxes owed and the parcel goes unsold, the clerk gets only the $44 filing fee and the $100 sale fee. No 5% commission, because no taxes were "received and paid over."
• Whether a delinquent tax case is filed as one suit against many taxpayers or many separate suits, the clerk's total fees are the same. Fees are per parcel, not per case.

The clerk is also entitled, under separate statutes, to reimbursement for actual costs of service of process and other sheriff's fees (Tenn. Code Ann. § 67-5-2410(c)(1)) and for title examination, extra publication, survey, environmental assessment, and similar necessary costs (§ 67-5-2410(d)). The 5% commission and the per-parcel fees do not displace those reimbursements.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The exact dollar amounts in Tenn. Code Ann. § 8-21-401 have been adjusted over time. Pull the current statute before relying on the $44 / $100 / 5% figures. The structure (per-parcel filing fee + per-parcel sale fee + commission on taxes received) has been stable but the numbers can change.

Background and statutory framework

Two parallel sources of clerk compensation. Tenn. Code Ann. § 8-21-401 sets the general fee schedule for court clerks across most case types. Tenn. Code Ann. § 67-5-2421(a) cross-references that schedule for delinquent property tax cases, providing that "[t]he money paid into court shall be received by the clerk and paid out by the clerk in the same manner as other public revenue, and the clerk shall receive the same compensation for receipting for and disbursing taxes under these proceedings as is allowed upon the clerk's receipt and disbursement of other public revenues." That cross-reference is the link that drops the 5% commission of § 8-21-401(h)(1) into delinquent tax cases.

§ 8-21-401(b)(1)(F). Authorizes the per-parcel filing fee (originally $42) in delinquent property tax cases and the $100 per-parcel "sale" fee for "each parcel of property for which the judge issues an order to sell."

§ 8-21-401(j)(2). Effective July 1, 2012, added $2 to the filing fee (now $44), earmarked for computer hardware purchases or related expenses.

§ 8-21-401(h)(1) & (h)(2). 5% commission on taxes, fines, forfeitures, fees, and amercements received and paid over; 10% in Shelby County.

§ 67-5-2506(a)(3). Distribution waterfall for sale proceeds: up to 10% to unpaid attorney's compensation; then the costs of suit (which include the clerk's per-parcel fees); then the remainder to county and municipal tax liens.

§ 67-5-2506(b)(3). Variant distribution for eight specified population-bracket counties; substantively similar.

§ 67-5-2410. Authorizes separate reimbursement of process service, sheriff's fees, title examination, publication, surveys, and environmental costs. These are not "fees" to the clerk but pass-through reimbursements.

Commissioner-of-court special rule. Under § 8-21-401(i)(7), when a court appoints a clerk as special commissioner to sell real or personal property, the special commissioner gets up to 10% on the first $6,000 of sales and a discretionary additional amount above that. The AG flagged this is a different track from delinquent property tax cases, and does not displace the per-parcel fees and 5% commission already specified.

Common questions

Are the per-parcel fees collected up front?

The $44 is a filing fee, paid (or advanced and recovered from sale proceeds) when the lawsuit is filed. The $100 per-parcel sale fee is recovered from sale proceeds. The 5% commission is taken from the taxes the clerk actually collects.

What if the lawsuit lumps 200 parcels into one case?

The clerk still gets $44 × 200 in filing fees and $100 × the number of parcels actually ordered sold. The single-case-vs-multiple-cases choice is the delinquent tax attorney's call and does not affect the clerk's compensation.

Where does the 5% commission come from in a tax sale?

From the taxes that the clerk receives and pays over. If a property sells for $30,000 and the delinquent taxes plus statutory penalties and interest total $4,000, the clerk's 5% commission is calculated on $4,000, not on $30,000. The "surplus" above taxes is paid to the former owner or otherwise distributed by separate rule, and is not part of the commission base.

Does the 10% cap in § 67-5-2506 ever limit the clerk?

No. The 10% cap applies only to attorney's fees out of the sale proceeds. The clerk's per-parcel fees and 5% commission are separate.

What if there's a bidder shortage and the parcel doesn't sell?

The clerk still gets the $44 filing fee and the $100 sale fee. The clerk does not get a 5% commission because no taxes were received and paid over on that parcel.

Citations

Tenn. Code Ann. §§ 8-21-401, 8-21-409, 8-21-801, 8-22-101, 67-5-2410(c)(1), 67-5-2410(d), 67-5-2421(a), 67-5-2506(a)(3), 67-5-2506(b)(3). Cases: Ridley v. Spain, 178 Tenn. 504, 160 S.W.2d 402 (1942); Marra v. Bank of New York, 310 S.W.3d 329 (Tenn. Ct. App. 2009).

Source

• Landing page: https://www.tn.gov/attorneygeneral/opinions.html
• Original PDF: https://www.tn.gov/content/dam/tn/attorneygeneral/documents/ops/2013/op13-096.pdf

Original opinion text

November 27, 2013

Opinion No. 13-96

Court Clerk's Fees in Delinquent Tax Lawsuits

QUESTIONS

1. What compensation, fees, and costs is a Clerk and Master entitled to receive for delinquent taxpayer lawsuits and tax sales?

2. Does the cost reimbursement provided for in Tenn. Code Ann. § 67-5-2506(a)(3) and (b)(3) include the Clerk and Master's total compensation, or is the Clerk and Master entitled to receive fees in addition to this compensation for conducting the tax sale and other duties in connection with delinquent taxpayer lawsuits?

3. If the Clerk and Master is entitled to receive additional fees in delinquent taxpayer lawsuits, what happens if those fees, when combined with costs and attorney's compensation, exceed the 10% of sale proceeds cap amount in Tenn. Code Ann. § 67-5-2506(a)(3)?

4. What compensation is a Clerk and Master entitled to receive under Tenn. Code Ann. § 67-5-2421(a)?

5. Is the determination of compensation provided for in Tenn. Code Ann. § 67-5-2421(a) based on the fee schedule contained in Tenn. Code Ann. § 8-21-401? If so, what fee or percentage mentioned in that section of the law applies to delinquent taxpayer lawsuits?

6. If the Clerk and Master is entitled to receive fees in addition to compensation in delinquent taxpayer lawsuits, are those fees based only on the sale proceeds actually deposited in court under Tenn. Code Ann. § 67-5-2421(a)?

7. If the local government prosecuting a delinquent taxpayer lawsuit does not bid in the amount of taxes owed at the tax sale, and the property remains unsold, is the Clerk and Master entitled to any fee for those properties, other than the filing fee and cost of public notices?

8. Is there a difference in the amount or calculation of compensation and fees to which the Clerk and Master is entitled if the delinquent taxpayer lawsuits are filed as one lawsuit against multiple delinquent taxpayers, or as separate lawsuits against each individual delinquent taxpayer?

OPINIONS

1. In delinquent taxpayer lawsuits, the court clerk is entitled to receive a filing fee of $44.00 per parcel that is included in the suit. Tenn. Code Ann. § 8-21-401(b)(1)(F) & (j)(2). For each parcel of property for which the judge issues an order to sell, the court clerk additionally is entitled to receive a fee of $100.00 for the clerk's services related to the sale. Tenn. Code Ann. § 8-21-401(b)(1)(F). For all property taxes received and paid over by the court clerk in the context of the delinquent tax proceeding, including any associated penalties and interest, the clerk is entitled to a commission of 5%. Tenn. Code Ann. § 8-21-401(h)(1).

2. The court clerk's right to receive fees and commissions is governed by Tenn. Code Ann. §§ 8-21-401 and 67-5-2421(a). The provisions of Tenn. Code Ann. § 67-5-2506(a)(3) and (b)(3) govern the order in which sale proceeds from property sold for delinquent property taxes are distributed and do not entitle the court clerk to receive additional compensation.

3. The provisions of Tenn. Code Ann. § 67-5-2506(a)(3) do not entitle the court clerk to receive additional compensation. Instead, these provisions set forth the generally applicable method for distributing the tax sale proceeds. In any event, the 10% cap referenced in the statute applies only to unpaid attorney's fees and not to court costs.

4. Under Tenn. Code Ann. § 67-5-2421(a), the court clerk is entitled to receive the same compensation as the clerk would receive in any other case involving the receipt and disbursement of taxes or public revenues. Accordingly, the court clerk is entitled to receive a commission of 5% of any property taxes received and paid over in the context of the delinquent tax proceeding, including any penalties and interest, under Tenn. Code Ann. § 8-21-401(h)(1).

5. Yes, the compensation provided for in Tenn. Code Ann. § 67-5-2421(a) is based on the fee schedule contained in Tenn. Code Ann. § 8-21-401. Under Tenn. Code Ann. § 8-21-401(b)(1)(F) and (j)(2), the court clerk is entitled to receive a filing fee of $44.00 per parcel. The court clerk is entitled to receive an additional fee of $100.00 for each parcel of property for which the judge orders a sale. Tenn. Code Ann. § 8-21-401(b)(1)(F). Under Tenn. Code Ann. § 8-21-401(h)(1), the court clerk is entitled to a 5% commission of all property taxes received and paid over in the context of the delinquent tax proceeding, including any penalties and interest.

6. The court clerk is not entitled to receive fees or commissions other than those already described and set forth above. The court clerk is entitled to a filing fee of $44.00 for each parcel included in the lawsuit. Additionally, the court clerk is entitled to a fee of $100.00 for each parcel ordered sold. Tenn. Code Ann. § 8-21-401(b)(1)(F) & (j)(2). The court clerk's 5% commission is based upon the amount of property taxes received and paid over and not upon the amount of the sale proceeds. Tenn. Code Ann. § 8-21-401(h)(1).

7. If the local government prosecuting a delinquent taxpayer lawsuit does not bid in the amount of taxes owed at the tax sale, and the property remains unsold, the court clerk is entitled only to the $44.00 filing fee and the additional $100.00 fee to conduct the sale. The court clerk cannot receive a 5% commission unless the clerk actually receives and pays over property taxes that are due on the parcel. Tenn. Code Ann. § 8-21-401(h)(1).

8. Regardless of the number of parcels included in a delinquent tax lawsuit, the filing fee remains $44.00 per parcel included and $100.00 per parcel ordered sold. Tenn. Code Ann. § 8-21-401(b)(1)(F) & (j)(2). Accordingly, the court clerk still should receive the same amount of fees whether the delinquent tax attorney chooses to pursue a single or multiple lawsuits.

ANALYSIS

The right of court clerks to receive fees and commissions in civil and other cases generally is governed by Tenn. Code Ann. § 8-21-401. As pertinent to your request, that statute authorizes court clerks in delinquent property tax cases to "assess a filing fee of forty-two dollars ($42.00) per parcel." Tenn. Code Ann. § 8-21-401(b)(1)(F). Effective July 1, 2012, this amount increased by $2.00 for a total filing fee of $44.00 per parcel. Tenn. Code Ann. § 8-21-401(j)(2). Additionally, "[f]or each parcel of property for which the judge issues an order to sell," the court clerk is authorized to assess "a fee of one hundred dollars ($100) for [the] clerk's services related to that action." Tenn. Code Ann. § 8-21-401(b)(1)(F).

In delinquent tax proceedings, "[t]he money paid into court shall be received by the clerk and paid out by the clerk in the same manner as other public revenue, and the clerk shall receive the same compensation for receipting for and disbursing taxes under these proceedings as is allowed upon the clerk's receipt and disbursement of other public revenues." Tenn. Code Ann. § 67-5-2421(a) (2013). Section 8-21-401(h)(1), in turn, provides that "for receiving and paying over all taxes, fines, forfeitures, fees and amercements, the clerk of the court is entitled to a five percent (5%) commission." Accordingly, to the extent that the court clerk collects and pays over any property taxes received in the context of the delinquent tax lawsuit, including statutory penalties and interest, the clerk "is entitled to a five percent (5%) commission" of such taxes received and paid over. Tenn. Code Ann. § 8-21-401(h)(1). The court clerk is entitled to this commission whether the clerk receives and pays over the taxes prior to a tax sale or after a tax sale from the sale proceeds. The commission applies to the amount of property taxes actually received and paid over and not to the total sale proceeds in cases where the sale price exceeds the taxpayer's obligation to pay taxes, court costs, and attorney's fees.

Once the court clerk has conducted a tax sale, Tenn. Code Ann. § 67-5-2506 sets forth the generally applicable method for distributing the sale proceeds. That statute provides that

[u]p to ten percent (10%) of the sale proceeds shall be applied, first, to payment of any unpaid balance of compensation due the prosecuting attorney; second, the proceeds of the sale shall be applied to the costs of the suits; and third, the remainder shall be applied to the county first and second, to any municipality having a tax lien on the same property.

Tenn. Code Ann. § 67-5-2506(a)(3). The statute provides an alternative, but similar, method for distributing the sale proceeds in counties falling within eight specified population brackets. Tenn. Code Ann. § 67-5-2506(b)(3).

The 10% cap referred to in your request applies only to the payment of unpaid attorney's fees. The statute initially provides that up to 10% of the sale proceeds shall be applied to pay attorney's fees. Then, the sale proceeds "shall be applied to the costs of the suits." Tenn. Code Ann. § 67-5-2506(a)(3). Finally, the "remainder shall be applied" to the payment of county and municipal taxes. Id. While the 10% cap restricts the amount that may be paid as attorney's fees, it does not serve to limit the percentage of proceeds that may be applied toward the court clerk's fees or local property tax obligations. At the same time, Tenn. Code Ann. § 67-5-2506(a)(3) does not authorize any additional compensation for the court clerk beyond that already discussed above.

ROBERT E. COOPER, JR.
Attorney General and Reporter

WILLIAM E. YOUNG
Solicitor General

MARY ELLEN KNACK
Senior Counsel

Requested by:

The Honorable Lowe Finney
State Senator
312 War Memorial Building
Nashville, Tennessee 37243

The Honorable Bill Sanderson
State Representative
204 War Memorial Building
Nashville, Tennessee 37243