House Bill 2338 amends Tennessee Code Annotated, Title 66, by introducing new provisions regarding the responsibilities of homeowners' associations (HOAs) to maintain fidelity bonds. The bill defines key terms such as "board of directors," "declaration," and "homeowners' association," clarifying the roles and governance structures within these organizations. It mandates that any HOA collecting assessments for common expenses must obtain and maintain a blanket fidelity bond to protect against losses due to theft or dishonesty by its officers, directors, employees, or managing agents.

The required fidelity bond must cover an amount equal to the reserve balances of the association plus one-fourth of the aggregate annual assessment income, with a minimum coverage of $10,000. The bill allows the board of directors or managing agent to secure this bond on behalf of the HOA. This legislation is set to take effect on July 1, 2026, emphasizing the importance of financial security and accountability within homeowners' associations.