This bill, the Tennessee Homeowners Association Act, will apply to all common interest communities that may be used for residential purposes. This bill may not be varied by agreement, and rights conferred by this bill may not be waived.
This bill does not apply to condominiums governed by the Tennessee Condominium Act of 2008, or to timeshare arrangements governed by the Tennessee Time-Share Act of 1981.
The following provisions of this bill will apply to all common interest communities, and other provisions of this bill will apply to all common interest communities, but only with respect to events and circumstances occurring after July 1, 2022, (however, the application of this provision to the events and circumstances does not invalidate existing provisions of the declaration, bylaws, or plats or plans of those common interest communities):
(1) Meetings of the executive board and committees of the association authorized to act for the association must be open to the unit owners except during executive sessions. The executive board and committees may hold an executive session only during a regular or special meeting of the board or a committee. No final vote or action may be taken during an executive session. An executive session may be held only to:
(A) Consult with the association's attorney concerning legal matters;
(B) Discuss existing or potential litigation, mediation, arbitration, or administrative proceedings;
(C) Discuss labor or personnel matters;
(D) Discuss contracts, leases, and other commercial transactions to purchase or provide goods or services currently being negotiated, including the review of bids or proposals, if premature general knowledge of those matters would place the association at a disadvantage; or
(E) Prevent public knowledge of the matter to be discussed if the executive board or committee determines that public knowledge would violate the privacy of any person;
(2) No fee, late charge, or fine may be levied against a unit owner unless the fee, late charge, or fine is reasonable. The association must make a schedule of any fees, late charges, and fines that may be imposed available to the unit owners, either by inclusion in the declaration or by other reasonable means of notice. No fee, late charge, or fine may be levied against a unit owner unless the fee, late charge, or fine appears on the schedule previously made available to the unit owners;
(3) The association has a lien on a unit for any assessment levied against that unit or late charges or fines imposed against its unit owner from the time the assessment, late charge, or fine becomes due, which lien may be foreclosed by judicial action. The declaration may provide that the association's lien may be foreclosed in like manner as a deed of trust with power of sale; provided, the association must give notice of its action to the unit owner and to all lienholders of record prior to the first publication of notice. Unless the declaration otherwise provides, fees, charges, late charges, fines, and interest charged pursuant to this bill are enforceable as assessments under this provision. If an assessment is payable in installments, the full amount of the assessment is a lien from the time the first installment of the assessment becomes due;
(4) Except to the extent expressly permitted or required by other provisions of this bill, no amendment may change the boundaries of any unit, or the allocated interests of a unit, or prohibit the leasing of any unit, in the absence of the consent of all affected unit owners; and
(5) The association, upon request from a unit owner, a purchaser, or any lender to a unit owner or a purchaser, or their respective authorized agents, must provide to the requesting party certain information specified in this bill, to the extent applicable, such as the contact information of the declarant, association and common interest community; a copy of the current rules; and the most recent balance sheet. The association may charge a reasonable fee for providing the information which, if not paid, may be assessed against the unit whose owner, lender, or purchaser requested the information. If the declarant prepared or caused to be prepared all or part of the information required by this bill, the declarant may be held liable for any materially false or misleading statements, or for any material omissions of any required information, with respect to that portion of the information that the declarant prepared. If the association or declarant, as applicable, fails to provide the information, then the association or declarant, as applicable, will be liable for and must pay a fine or penalty of:
(A) $250 to the party on whose behalf the request is made, following the first request;
(B) $500 if the association or declarant does not supply the information within 10 business days following the second request; and
(C) All costs, including reasonable attorney's fees, incurred in obtaining the information or enforcing the fines.
This bill details other requirements regarding the information to be provided in accordance with this item (5) and penalties for failure to provide the information, including remedies for prospective buyers.
This bill specifies that the declaration, bylaws, or plats and plans of any common interest community created before July 1, 2022, may be amended to achieve any result permitted by this bill, regardless of what applicable law provided prior to July 1, 2022.
This bill also provides the following:
(1) This bill describes various arrangements between an association and other parties and specifies that those arrangements do not create a separate common interest community;
(2) An association must be organized no later than the date the first unit in the common interest community is conveyed. The membership of the association at all times must consist exclusively of all unit owners. The association must be organized as a profit or nonprofit corporation or limited liability company, or in the case of a common interest community with four or fewer units, the association may be organized as an unincorporated association;
(3) This bill details certain powers and duties of the association and specifies that, generally, any of such powers may be delegated by the bylaws to the executive board;
(4) In most cases, an association must have an executive board created in accordance with its declaration or bylaws. This bill details the powers of the board;
(5) This bill details what the bylaws of the association must provide. The bylaws for any association and any amendments to the bylaws may be, and the bylaws of any association formed after July 1, 2022, and any amendments to the bylaws must be, recorded in the county or counties where the property or any part of the property lies;
(6) This bill requires an annual meeting of the association and provides for other special meetings necessary to address any matter affecting the common interest community or the association, in certain circumstances. This bill describes requirements for the meeting notice, and requires that the notice specifically state if certain items are on the agenda, such a proposed amendment to the bylaws or budget changes;
(7) This bill details the requirements applicable when the declarant still has control of the association and the requirements for transfer of control. This bill also specifies the voting requirements for an association;
(8) This bill imposes requirements on an association regarding the keeping of certain financial records;
(9) This bill details the requirements for breach by a tenant;
(10) This bill delineates the requirements for the executive board and the process for removing a member from the board;
(11) This bill requires the annual adoption of a budget and details specific requirements regarding the budget. This bill also specifies the requirements for assessments;
(12) This bill specifies that the liability of a unit owner in an unincorporated association for a judgment against the association is limited to the percentage that the vote in the association's affairs applicable to that owner's unit bears to the total number of votes in the association's affairs applicable to all units in the association;
(13) This bill provides that in addition to any other remedy provided by the declaration, any right or obligation declared by this bill is enforceable by judicial proceeding. Parties to a dispute arising under this bill, the declaration, or the bylaws may agree to resolve the dispute by any form of binding or nonbinding alternative dispute resolution in certain situations; and
(14) This bill details the circumstances under which an association will be deemed to be an inactive association.