The Tennessee Condominium Act of 2008 and Older Condos and the Power to Assess
September 23, 2013

January 1, 2009, was the start of a new era in Tennessee as it saw a new set of laws regarding condominiums come into effect – the Tennessee Condominium Act of 2008, Tenn. Code § 66-27-101, et seq. (the “Condominium Act”).  The Condominium Act, generally, applies to all condominiums created after January 1, 2009.  A condominium is created when its master deed (now known as a “declaration” under the Condominium Act) is recorded.  The Condominium Act even provides that existing condominiums may opt into the new act.  Locally, there has not been much condominium development and no condominiums have opted into the Condominium Act.

What many people do not understand is that many provisions of the Condominium Act apply to condominiums created under the previous Tennessee Horizontal Property Act, Tenn. Code § 66-27-101, et seq (the “Horizontal Property Act”).  Thus, understanding the provisions of the Condominium Act and what does and does not apply to existing condominiums is of paramount importance.

Over the next several weeks, I will touch on several provisions of the Condominium Act that apply to existing condominiums.

Pursuant to Tenn. Code § 66-27-202(a) certain provisions of the Condominium Act apply to all condominiums in Tennessee (even those created prior to January 1, 2009), but only with respect to events and circumstances that occur after January 1, 2009.  This date is vitally important for condominiums in Tennessee.  Even though a condominium was formed under the Horizontal Property Act, if an event occurs after January 1, 2009, provisions of the Condominium Act may come into play.

In most instances, these provisions of the Condominium Act do not invalidate or supersede the existing provisions of the master deed, declaration, bylaws, or plat.  However, there is one instance, Tenn. Code § 66-27-414(g), where the provisions of the Act invalidate and supersede the provisions of all previously recorded documents.

Tenn. Code § 66-27-414(g) provides:

[w]ith respect to residential units only, notwithstanding any provision to the contrary set forth in the declaration, the board of directors shall have the power at any time to levy assessments to preserve the physical integrity of the condominium or to comply with governmental requirements applicable to the condominium.  The assessments may be in the form of a single assessment or an assessment for reserves to be paid in such installments as shall be determined by the board of directors.

This provision explicitly allows the board of directors to levy an assessment in certain situations.  The operative question is what does “preserve the physical integrity of the condominium” mean?  Consider the Nashville floods of May 2010.  If the common elements of a residential condominium development were damaged, this provision would give the Board of Directors the authority to levy an assessment to repair such damage.  This provision, given that it supersedes all provisions of a condominium’s recorded documents, may become a powerful tool for condominiums in addressing future maintenance issues.  The issue is how a Board determines whether an issue impacts the “physical integrity of the condominium”.  A wise Board would seek independent legal counsel which would review the issue and render a legal opinion on the matter.  This opinion would provide a backstop on any future Board decision.

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