Tennessee Statewide Rule
Tennessee Condo & HOA Assessments and Budget Rules (T.C.A. § 66-27-414)
Key Facts
- Governing law
- Condos: T.C.A. § 66-27-415; HOAs: recorded declaration + Title 48
- Lien trigger
- From the time the assessment or fine becomes due (condos)
- Foreclosure method
- Judicial action (condos); declaration-based for HOAs
- Mortgage priority
- 6 months of assessments, capped at 1% of mortgage (condos)
- Limitation period
- Lien extinguished after 6 years (condos)
Summary
Tennessee has no general homeowners' association assessment statute, so a subdivision HOA's dues, budget, and late fees come from its recorded declaration rather than from state law. Condominiums run on T.C.A. § 66-27-414: the declarant pays all common expenses until the board of directors levies its first assessment, after which assessments must be made at least annually and based on a budget the board adopts at least annually, allocated among units by the formula the declaration sets under § 66-27-307(a). Past due common expense assessments bear interest at a rate the association establishes, capped at the maximum effective annual rate determined by the Tennessee Department of Financial Institutions. Costs benefiting fewer than all units may be charged only to the units benefited, insurance is assessed in proportion to risk and utilities in proportion to usage, and § 66-27-414(g) lets a board assess residential units to preserve the condominium's physical integrity or to meet a government requirement even where the declaration says otherwise. For subdivision HOAs, § 66-27-706 requires a two-thirds vote of the total membership plus a financing or payment plan before a special assessment for a nonessential amenity, and forbids any foreclosure action if a member does not pay it. Tennessee's condominium super-lien no longer exists: 2016 Public Chapter 866 replaced the association's six-month priority over a first mortgage with a priority in the foreclosure proceeds capped at the lesser of six months of budgeted common expense assessments or one percent of the maximum principal indebtedness secured by the first mortgage. From January 1, 2027, § 66-27-902 requires any Tennessee HOA collecting common expense assessments to carry a blanket fidelity bond worth its reserve balances plus one-fourth of its aggregate annual assessment income, and never less than ten thousand dollars.
(a) Until the board of directors makes a common expense assessment, the declarant shall pay all common expenses. After any assessment has been made by the board of directors, assessments must be made at least annually, based on a budget adopted at least annually by the board of directors. (b) Except for assessments under subsections (c)-(e), all common expenses must be assessed against all the units in accordance with the allocations set forth in the declaration pursuant to § 66-27-307(a). Any past due common expense assessment or installment of the common expense assessment bears interest at the rate established by the association not exceeding the maximum effective annual rate of interest as determined by the department of financial institutions. . . . (g) With respect to residential units only, notwithstanding any provision to the contrary set forth in the declaration, the board of directors shall have the power at any time to levy assessments to preserve the physical integrity of the condominium or to comply with governmental requirements applicable to the condominium. The assessments may be in the form of a single assessment or an assessment for reserves to be paid in such installments as shall be determined by the board of directors.
Full Breakdown
For condominiums under the Tennessee Condominium Act of 2008, § 66-27-415(a) provides that "the association has a lien on a unit for any assessment levied against that unit or fines imposed against its unit owner from the time the assessment or fine becomes due," foreclosable by judicial action. Under § 66-27-415(b), the lien is prior to a first mortgage to the extent of common-expense assessments that would have come due during the six months immediately preceding an enforcement action, capped at 1% of the mortgage's principal. The lien up to that priority is "perfected without recording," and is extinguished unless enforced within six years. Tennessee has no equivalent statute for standard subdivision HOAs: those liens and any power of sale arise only from the recorded declaration, enforced as a nonprofit corporation.
Violations & Penalties
Section 66-27-414 sets no penalty of its own for a late assessment. What a delinquent condominium owner owes is the unpaid assessment plus any interest the association has established, which the statute caps at the maximum effective annual rate determined by the Tennessee Department of Financial Institutions. For a subdivision homeowners' association, § 66-27-706 goes further and forbids any foreclosure action against a member who does not pay a special assessment levied for a nonessential amenity, whatever the declaration says. How a condominium association actually collects through its assessment lien, and what priority that lien carries against a first mortgage, is governed separately by § 66-27-415.
Frequently Asked Questions
Can a Tennessee HOA foreclose on my home for unpaid dues?
Does a Tennessee condo HOA lien come ahead of my mortgage?
Does Tennessee have a general HOA assessment law?
Sources
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