Proposed Legislation: Tennessee Homeowners Association Act

 

Tennessee Senate Bill 0405/House Bill 610

As introduced, enacts the “Tennessee Homeowners Association Act.” – Amends TCA Title 66.

Many developers like to plan their developments as Planned Unit Developments, or PUDs.  The exact definition of a PUD can vary according to local code, but here in eastern Tennessee they are generally single-family detached residential developments in which the real estate is commonly owned and much or all of the infrastructure is privately maintained through a homeowners’ association (HOA) with dues rather than by the local government.  Many local codes require that an HOA be incorporated, with article of incorporation recorded with the county register of deeds, before final certificates of occupancy be issued.

But not all do.  Some home-buyers who buy in a PUD do not understand exactly what they are getting, and are unpleasantly surprised when, for example, the city tells them it is not responsible for fixing potholes on their road.  Since the Tennessee Condominium Act (Tenn. Code Ann. 66-27-201 et seq.) does not apply to PUDs, regulation of how they operate (or if they operate) is spotty.  The Tennessee Bar Association has proposed this bill to address the organization and operation of HOAs, and requires that certain information (particularly financial information) be available to owners of PUD units.  The HOA documents and any amendments thereof must also be recorded in the register of deeds office, so they are public information available to any prospective buyers.

Whether this bill passes or not, prospective home-buyers should be aware of whether the home they are looking to buy is part of a PUD or subject to an HOA agreement or other restrictions. Existing HOAs would be wise to periodically review their incorporating documents and bylaws to make sure they are operating they way they should.  SB0405/HB610 may be a good incentive for HOAs to make sure their houses are in order.