Section 1240-02-05-.06 - ENFORCEMENT OF LIENS BY ADMINISTRATIVE SEIZURE OR SALE ORDER(1) In cases where there is an arrearage of child or spousal support in a Title IV-D child support case or in which a lien arises pursuant to T.C.A. § 36-5-901, the Department may, without further order of a court, secure the assets of the obligor to satisfy the current obligation and the arrearage by: (a) Intercepting or seizing periodic or lump-sum payments or benefits due the obligor: 1. From a state or local agency;2. From judgments of any judicial or administrative tribunal, settlements approved by any judicial or administrative tribunal, and lottery winnings;(b) Attaching or seizing assets of the obligor or the assets in which the obligor has an interest that are in the possession of any other person or entity, or that are held in any financial institution as defined in 1240-2-5-.02;(c) Attaching public and private retirement funds; and(d) Imposing liens in accordance with this Chapter and § 36-5-901 et seq. and, in appropriate cases by forcing the sale of the obligor's legal or equitable interest in the property and distributing the proceeds of such sale.(2) Enforcement of Lien. (a) The Department may enforce the provisions of Rule 1240-2-5-.03 and T.C.A. § 36-5-901 et seq. by issuance of an administrative order to any person or entity directing the seizure, encumbrance or sale of any assets of an obligor.(b) The order shall direct the person or entity to hold or encumber, subject to any due process procedures provided to the obligor, all assets of any kind of the obligor who is subject to the order, pending the outcome of the administrative due process procedures provided by this Chapter.(c) The order shall be based upon and issued pursuant to an existing judicial or administrative order, which has previously established support under which an arrearage, due to overdue support, as defined in T.C.A. § 36-5-901, has occurred.(3) The administrative order for seizure or sale of assets may be issued upon determination by the Department, as shown by records of the support obligation, that arrears involving the obligor's support obligations exist.(4) Notice to the Obligor. (a) There shall be no requirement of advance judicial or administrative notice or hearing prior to the seizure or encumbrance of the obligor's property by administrative order, but the Department will not permit the final disposition of any property seized or encumbered under the lien enforcement procedures until the exhaustion of administrative and judicial remedies as provided in this Chapter at 1240-2-5. .13.(b) Process and Form of Notice .1. A notice to the obligor against whom the administrative order for seizure or sale of assets is directed shall be sent by mail to the last address of record possessed by the Department as shown on TCSES.2. The notice shall be sent within five (5) days of the issuance of the administrative seizure order.3. The notice shall inform the obligor of the fact that the obligor's assets have been the subject of an administrative order and that they have been seized or are subject to sale and are being held, may be conveyed to the Department or may be sold, subject to the right to an administrative hearing to contest the seizure or sale of such assets.4. The notice shall specify the sum demanded and shall contain, in the case of personal property, an account of the property actually seized and, in the case of real property, a description with reasonable certainty of the property seized. In the case of assets in a financial institution, it shall be sufficient to notify the obligor of the seizure of any assets of the obligor that may be held by any institution to which the order is directed.(5) All administrative orders for seizure or sale shall be subject to and subordinate to: (a) Any order or automatic stay by the United States Bankruptcy Court affecting an asset of the obligor;(b) An attachment or execution under any judicial process in effect at the time of the administrative seizure order, pending modification of such court's orders;(c) A priority under Rule 1240-2-5-.05; or(d) A claim for reasonable attorneys fees, subject to the limitations on such fees by the rules of the Tennessee Supreme Court, whether evidenced by a court order, a statutory provision, or a contract.(6) An administrative order for the seizure of pension and retirement funds shall comply with the provisions for a qualified domestic relations order pursuant to 29 USC §1056(d), if applicable.(7) If the assets of the obligor are known by the person or entity which received such administrative order to be subject to any orders of the United States Bankruptcy Court, or to any attachment, execution or existing lien, that person or entity shall notify the Department at the address contained in the order within ten (10) days after receipt of the administrative order. With respect to deposit accounts of the obligor, the depository financial institution shall inform the Department of the unencumbered balances of such accounts.(8) Method of Issuance of Administrative Order of Seizure or Sale.(a) Form of Issuance and Effectiveness.1. The order may be issued, and shall be effective, if issued to the holder of property or to the person or entity in possession of, or obligated with respect to property, or rights to, property of the obligor.2. The order may be issued electronically or magnetically, or manually by a paper document approved by the Department.3. The administrative order of seizure may also be issued, and shall be effective, if issued to the holder of the property of the obligor or to the person or entity in possession of, or obligated with respect to property or rights to, property of the obligor, if the order is transmitted electronically or magnetically by use of any computer data match process that is based upon any information available to the Department showing that the person whose property is to be seized or encumbered is a child support obligor owing overdue support as defined in this Chapter.4. The order shall be based upon any information showing to the Department or its contractors or other agents that the person whose property is to be seized is an obligor owing overdue support as defined in this Chapter.(b) Seizure Orders for Less Than the Full Amount.1. When an administrative order is issued by the Department pursuant to any provisions of law or regulations or pursuant to agreements entered pursuant to T.C.A. § 45-19-101(a) or (b) directing the encumbrance, escrow, seizure or surrender of assets of an obligor consisting of a demand deposit account, or an account accessible by a check or negotiable order of withdrawal for the purpose of satisfying a lien for past-due child support, the Department may direct that only a portion of such accounts, up to the amount necessary to satisfy the existing lien for past-due child support, be encumbered, escrowed, seized or surrendered.2. If less than the whole amount of the account is sought, the Department's order shall direct the financial institution to withhold a specific percentage or a specific dollar amount of those types of accounts.(9) To satisfy overdue support, an order of seizure or sale may be issued to the obligor if the obligor is in physical possession of property sought to be sold, and the order shall direct that the obligor hold property subject to the provisions of this Chapter.(10) Duty of Recipient of Administrative Order of Seizure.(a) Upon receipt of the administrative order of seizure, whether received electronically, magnetically or otherwise, the person or entity which has possession of the assets of the obligor shall immediately seize, hold, and encumber such assets, as directed by the Department, pending further direction from the Department as to the disposition of the assets or pending any further orders of any court of competent jurisdiction.(b) The person or entity must secure in an escrow account for such purpose, or by such other reasonable means, such assets of the obligor in its possession, and must take any other steps deemed reasonable to preserve any real or personal property.(c) Upon receipt of directions from the Department that all due process procedures have been completed or were waived in any manner, and subject to the provisions of paragraph (5) and subject to the priority for the Department's liens as described in Rule 1240-2-5-.05, the person or entity to whom or to which the order was directed shall pay or deliver to the Department, pursuant to its direction, the assets of the obligor that are held or that come into the possession or control of the person or entity and that are necessary to comply with the terms of the Department's administrative order.(11) Sale of property that has been seized from an obligor in physical or constructive possession of the property may proceed following exhaustion of administrative or judicial processes provided in this Chapter, applicable provisions of T.C.A. § 36-5-1001 et seq. and the procedures for sale provided by these rules.(12) Pursuant to T.C.A. § 36-5-905(g), all persons or entities complying with any administrative order issued pursuant to this section shall be absolutely immune from any liability, civil or criminal, for compliance with the terms of such order or attempted compliance in good faith with such order.Tenn. Comp. R. & Regs. 1240-02-05-.06
Original rule filed December 18, 2001; effective March 3, 2002.Authority: T.C.A. §§ 4-5-202; 36-5-901 et seq.; 36-5-912; 45-19-101; 42 USC § 654a(h), and 42 USC § 666(a)(14), (17)(C) .