Many states have their own laws that apply to homeowners associations, and Tennessee is no exception. Learn about the different Tennessee HOA laws that associations must keep up with.
What You Need to Know About Tennessee HOA Laws
Homeowners associations are commonplace in the United States. Their popularity has risen exponentially throughout the years, thanks in large part to the role they play in preserving curb appeal and property values. As such, many states have adopted laws that specifically address homeowners associations and the way they must operate. Tennessee is not too far behind.
While the Volunteer State does not have a designated Act governing HOAs, legislators are considering passing one (SB405). If passed, this bill, titled the Tennessee Homeowners Association Act, shall control how HOAs operate.
Tennessee Condominium Act of 2008
Found under Section 66-27-201 through 66-27-507 of the Tennessee Code, the Tennessee Condominium Act of 2008 governs condominiums formed in the state on January 2, 2009, and onwards. Some parts of the Act may also apply to condominiums formed prior to said date.
The Tennessee Condominium Act of 2008 consists of the following parts:
- General Provisions.
- Units and Allocation of Common and Limited Elements.
- Unit Owners’ Association.
- Units Restricted to Residential Purposes.
Tennessee Horizontal Property Act
The Tennessee Horizontal Property Act also applies to condominium associations in Tennessee. However, this Act specifically governs condo associations formed prior to January 1, 2009. You can find the Tennessee Horizontal Property Act under Section 66-27-101 through 66-27-123 of the Tennessee Code.
Tennessee Nonprofit Corporation Act
Since Tennessee homeowners association laws fall under no specific Act, the Tennessee Nonprofit Corporation Act usually comes into play. Most homeowners associations in Tennessee are categorized as nonprofit corporations. Thus, they must adhere to the provisions found in the Tennessee Nonprofit Corporation Act.
This Act governs homeowners associations when it comes to corporate procedure and structure. You can find this Act under Title 48 of the Tennessee Code. It consists of the following chapters:
- General Provisions
- Purposes and Powers
- Office and Agent
- Members and Memberships
- Meetings and Voting
- Directors and Officers
- Amendment of Charter and Bylaws
- Mergers, Membership Exchanges, Entity Conversions, and For-Profit Conversions
- Sale of Assets
- Foreign Corporations
- Records and Reports
- Religious Corporations
- Transition Provisions
- Electric G&t Cooperative Act
Specific Tennessee HOA Laws
While Tennessee may not have a dedicated Act governing homeowners associations, there are still many important laws that can affect them.
Display of Political Signs
Many homeowners associations prohibit or restrict the display of certain signs and flags in an effort to maintain the aesthetics of the neighborhood. While such an attempt is certainly for the benefit of the association, it is not always lawful.
According to Section 2-7-143 of the Tennessee Code, otherwise known as the Tennessee Freedom of Speech Act, HOAs may not adopt a rule or covenant that prohibits homeowners from displaying political signs on their private property. However, HOAs may enforce reasonable restrictions when it comes to the placement and size of the signs.
Pursuant to Section 66-27-413 of the Tennessee Condominium Act of 2008, COAs must maintain property insurance and liability insurance for the common elements of the association. The policy must provide coverage at no less than 80 percent of the replacement cost of the insured property at the time of purchase. The liability insurance policy should also cover medical payments at no less than the amount specified within the association’s governing documents.
As for single-family residential associations, no state laws that require property or liability insurance currently exist. Still, given that insurance helps protect HOAs from severe financial loss, boards should consider obtaining it even if it is not mandatory.
To curb violations, many associations impose fines against homeowners who breach the HOA’s rules. There is a potential for abuse, though, when these fines are not properly regulated.
For condominiums created after January 1, 2009, Tennessee law requires that associations only impose reasonable fines. But, for single-family communities and older condos, no laws limit the fines. In such cases, it is necessary to refer to the association’s governing documents for guidance. Fines should strike the right balance and be neither too high nor too low.
Tennessee HOA Lien Law
It is not uncommon for homeowners associations to attach liens to the properties of delinquent members. For condo associations, Section 66-27-415 of the Tennessee Code stipulates that a COA has a lien on a unit for fines or assessments when they become due. The lien is then made effective through the recording of the lien in the county records.
Tennessee law does not say anything about liens for single-family communities, though. Thus, for HOAs not covered by the Tennessee Condominium Act of 2008, it is advisable to refer to the association’s CC&Rs. There, you will find out whether or not the HOA has the authority to place a lien on a property and any other requirements related to the lien.
Tennessee HOA Foreclosure Law
Once a lien has been placed on a property, homeowners associations typically have the option to foreclose on that lien. This is done in an attempt to collect on the member’s unpaid dues or fines.
In Tennessee, condo associations can foreclose a lien non-judicially under two conditions:
- If the COA’s governing documents allow it; and,
- If the COA provides proper notice of the foreclosure to the owner of the unit.
Condo associations can also foreclose on a lien judicially, though the process is a bit more complex.
It is worth noting that a Tennessee HOA statute of limitations on liens does exist. If the COA fails to initiate foreclosure proceedings within 6 years following the effective date of the lien, the lien no longer becomes effective. In other words, it is eliminated.
As with Tennessee HOA laws on liens, there are no laws governing foreclosures for single-family homeowners associations. The right of an HOA to foreclose on delinquent owners should be detailed in the association’s governing documents.
Protecting Your HOA from Liability
Homeowners associations in Tennessee should do their part to remain on the right side of the law. This means ensuring that HOA boards familiarize themselves with the various Tennessee HOA laws to avoid potential liability. Of course, not all boards have the time nor background in law to always stay up-to-date on these laws. This is where an HOA management company comes in.