House Bill 2031 aims to amend the Tennessee Code to establish regulations for accessory dwelling units (ADUs) within local jurisdictions. The bill defines an ADU as a residential unit that is independent of the primary dwelling and located on a lot zoned for single-family homes or duplexes. It prohibits local governments from enacting overly restrictive regulations regarding the size, occupancy, and construction of ADUs, such as requiring them to be smaller than 850 square feet, imposing stricter rules than those for single-family homes, or mandating that the primary dwelling's owner must occupy the property. Additionally, the bill allows local governments to adopt less restrictive requirements if desired.

The legislation also outlines the permit approval process for constructing an ADU, mandating that applications be processed without discretionary review and approved or denied within 60 days. If a local government fails to act within this timeframe, the application is automatically deemed approved. Property owners are granted the right to take legal action against local governments that violate these provisions, with the possibility of recovering attorney's fees. However, the bill clarifies that it does not override existing historic preservation laws or water quality regulations. The act is set to take effect on July 1, 2026.