2015 Legislative Update — the Proposed Tennessee Homeowners Association Act (HB610/SB405)
February 20, 2015

This year, the Tennessee Legislature is considering the Tennessee Homeowners Association Act (HB 610/SB 405). It was introduced on February 11, 2015. As yet, we have not had an opportunity to digest the proposed Act in its entirety. That being said, it appears to be a solution looking for a problem. While there is no governing statutory framework exclusively for homeowners associations in Tennessee, the questions which must be asked by the legislature are whether this Act is necessary, and if so is it the proper Act to legislate homeowners associations in Tennessee (especially in light of what other states have done).

The Act purports (pursuant to proposed Tenn. Code § 66-27-605) to apply “to all common interest communities that may be used for residential purposes.” Both “common interest communities” and “residential communities” are separately defined using definitions that refer to other terms which are separately defined. For our purposes, though, the Act applies to all residential homeowners and condominium owners associations in Tennessee, unless otherwise provided in the Act. The Act then states in proposed Tenn. Code § 66-27-606 that certain sections of the Act apply to all “common interest communities”, regardless of the date of the occurrence, and all of the other provisions of the Act apply to all “common interest communities”, but only with respect to events and circumstances that occur after July 1, 2015. The Act then provides in proposed Tenn. Code § 66-27-607(d) that the Act does not apply to condominiums governed by the Tennessee Condominium Act of 2008. Of course, pursuant to Tenn. Code § 66-27-202(a), the Tennessee Condominium Act of 2008 governs all condominiums built in Tennessee after January 1, 2009, and selectively applies to all other condominiums in the state. So, whether this provision in the proposed Act means that condominiums, in general, are exempted from the Act or only those condominiums constructed after January 1, 2009, are exempted from the Act is unknown.

So, to start, just to determine how the proposed Act is to be applied is something of a challenge. It is to be applied to all “common interest communities”, unless governed by the Tennessee Condominium Act (which is selectively applied to condominiums), and even then portions of the proposed Act apply only to events that occur after July 1, 2015. At first blush, this must be clarified.

The proposed Act contains some positive elements (such as a six-month reach-back for common interest communities). That being said more review by industry professionals is necessary before the legislature approves this Act.

We will update you as we review the proposed Act.

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