Tennessee Condo Liens: Fines Are Foreclosable, Priority Capped at 1%

Section 66-27-415 sits in Part 4 of Title 66, Chapter 27, the unit owners' association part of the Tennessee Condominium Act of 2008. The act took effect January 1, 2009, but § 66-27-202(a) names § 66-27-415 as one of the few sections that reach backward, applying to condominiums created before that date for events and circumstances occurring after it, without invalidating what an existing master deed, declaration, bylaws or plats already provide. A 1970s Tennessee condominium organised under the 1963 Horizontal Property Act is therefore covered by the modern lien section even though the rest of the 2008 act passed it by. The 1963 act's own lien provision, § 66-27-116, is far thinner: it makes unpaid pro rata expenses a lien that follows the apartment through a sale or conveyance and must be paid by the new owner, and it says nothing about foreclosure, priority or notice.

A conventional subdivision homeowners' association sits outside all of this. Chapter 27 reaches non-condominium associations in only four places and none of them creates a lien: Part 7, §§ 66-27-701 to 66-27-706, covers definitions, voting records on request, a vested right to lease, notice of a change in business entity information and special assessments for nonessential amenities; Part 8 is two sections on criminal activity reports in gated subdivisions; Part 9 covers property owners' association fidelity bonds; and Part 10 covers electric vehicle charging stations. If a Tennessee HOA outside a condominium has a lien, it is because the recorded declaration created one, and the declaration's own terms, not § 66-27-415, set the notice, the priority and the route to a sale.

For condominiums the lien is automatic and dated. It attaches from the time the assessment or fine becomes due, and where an assessment is payable in installments the full amount is a lien from the time the first installment falls due. Fines are the part owners rarely expect. Subsection (a)(4) provides that, unless the declaration says otherwise, fees, charges, late charges, fines and interest charged under § 66-27-402(a)(10), (11) and (12) are enforceable as assessments under this section, and § 66-27-402(a)(11) is the association's power to levy reasonable fines for violations of the declaration, bylaws and rules after notice and an opportunity to be heard. A Tennessee condominium owner can therefore lose the unit over accumulated covenant fines, not only over unpaid dues. Recording the declaration is record notice of the lien; § 66-27-415(d)(1) perfects without recording only the amount within the payment priority, and any delinquent amount above that must be recorded in the lien book at the register of deeds office in the county where the property lies.

Judicial foreclosure is the default route. The declaration may instead authorise foreclosure in like manner as a deed of trust with power of sale under title 35, chapter 5, but only if the association first notifies the unit owner and all lienholders of record before the first publication. Mailed notice is sufficient, sent to the unit or the owner's last address on file and to a lienholder or nominee of record at the address in the recorded instrument, and it is deemed received three days after deposit. The title 35 machinery it triggers is not light: § 35-5-101, as amended by 2025 Public Chapter 515, requires advertisement at least twice in a newspaper published in the county where the sale is to be made, plus a posting by a third-party internet posting company that stays publicly viewable for at least twenty continuous days, with the first newspaper publication at least twenty days before the sale, and a copy of the § 35-5-104 notice mailed to the debtor and any co-debtor by registered or certified mail on or before the first publication date.

The priority rule is where Tennessee changed course. Until 2016 the section gave the association a straight six-month priority ahead of a first mortgage. Public Chapter 866, effective June 1, 2016 and applying to any foreclosure action initiated on or after that date, rewrote subsections (a), (b) and (d). What survives is a priority in the proceeds of the sale, measured by the common expense assessments from the periodic budget adopted under § 66-27-414 that would have come due in the six months immediately preceding the enforcement action, but not exceeding one percent of the maximum principal indebtedness of the lien secured by the first mortgage or deed of trust. On a unit carrying a $300,000 first deed of trust that ceiling is $3,000, however large the arrears. An association foreclosure is subject to any prior mortgage and does not extinguish it, a lender's foreclosure is subject to the association lien only up to that payment priority amount, and the priority is not transferable and is extinguished if assigned to a third party, which shuts a debt buyer out of it. Subsection (d)(2) adds a trap for the association: where a mortgage holder has given it the holder's name, address and the unit, and the association then fails within thirty days of the date six months of common expense assessments became delinquent to notify that holder of the delinquency, the priority is lost.

Three practical limits close the section. A lien for unpaid assessments is extinguished unless proceedings to enforce it are instituted within six years after the date the lien became effective. Any judgment or decree in an action under the section must include costs and reasonable attorney's fees for the prevailing party. And the association must furnish a written statement of the unpaid assessments against a unit within seven days of a written request from the owner or a mortgage holder, binding on the association, which makes it the document to demand before any Tennessee condominium closing.

No state agency polices condominium assessments in Tennessee, so enforcement is entirely private and runs through the chancery or circuit court of the county where the unit sits. An owner who stops paying faces a lien that already exists from the due date, then either a judicial foreclosure under § 66-27-415(a)(1) or, where the declaration authorises it, a trustee's sale under title 35, chapter 5 preceded by the notice to the owner and to all lienholders of record that subsection (a)(2) requires. Subsection (f) preserves the association's alternative of suing the owner personally for the money instead of foreclosing, and expressly allows it to take a deed in lieu of foreclosure.

The fee shifting in subsection (g) is mandatory rather than discretionary: the judgment must include costs and reasonable attorney's fees for whichever side prevails, so an owner who defeats a wrongful lien recovers fees, while an owner who loses adds the association's legal bill to the secured debt. The lien is also not subject to the statutory or other right of redemption, homestead, or any other exemption unless the declaration specifically reserves it. On the association's side, mishandling the thirty-day delinquency notice in subsection (d)(2) does not destroy the lien but forfeits its priority over the first mortgage, which in a distressed sale usually means the association collects nothing.