Tennessee HOA Assessment Limits

Section 1: Overview — How assessment authority and limits work in Tennessee

Tennessee sets no percentage cap on how much an association can raise assessments. Which statute applies depends on the vintage and form of the community, and condominiums created under the 2008 Act carry a limited six-month, one-percent priority lien.¹ Three tracks govern: the Tennessee Condominium Act of 2008, Tenn. Code Ann. §§ 66-27-201 et seq., for condominiums created on or after January 1, 2009; the Tennessee Horizontal Property Act, Tenn. Code Ann. §§ 66-27-101 et seq., for condominiums and horizontal property regimes created before that date; and non-HPR planned communities, which lack a dedicated statute and answer instead to the recorded declaration and the Tennessee Nonprofit Corporation Act, Tenn. Code Ann. §§ 48-51-101 et seq.² Regular increases work through board adoption of a periodic budget, with no statutory ceiling and — for 2008-Act condominiums — no owner-ratification or owner-rejection step in the statute.³ Special assessments follow the declaration, and for 2008-Act condominiums the assessment lien carries a narrow priority over a first mortgage under § 66-27-415.⁴ On the national spectrum, Tennessee sits between statutory-cap states such as California — which bars a board from raising regular assessments more than 20 percent over the prior year or levying special assessments exceeding 5 percent of budgeted gross expenses without a member vote — and declaration-driven states, straddling both models depending on a community's vintage and form.⁵ The sections below set out the framework, the procedures, and the recent legislative and judicial record.

Section 2: The assessment framework

2A. Authority to levy and allocate assessments

For condominiums created on or after January 1, 2009, authority to assess flows from § 66-27-414. Until the board makes a common expense assessment, the declarant pays all common expenses; after the first assessment, the board must assess at least annually, based on a budget it adopts at least annually.⁶ Common expenses are allocated against all units according to the allocations stated in the declaration under § 66-27-307(a), so the declaration controls allocation while the board controls the dollar amount through the budget.⁷ For condominiums and horizontal property regimes created before January 1, 2009, the Horizontal Property Act governs: the council of co-owners administers expenses through bylaws recorded with the master deed, prorating costs among co-owners.⁸ Non-HPR planned communities have no dedicated assessment statute; their authority comes from the recorded declaration, and because most incorporate as nonprofit corporations, the Tennessee Nonprofit Corporation Act supplies the corporate authority to impose dues and assessments and the formalities for member voting and director duties.⁹ Across all three tracks, the recorded declaration is the controlling document for who pays what share.

2B. Limits on regular assessment increases

Tennessee imposes no percentage cap on regular assessment increases under any of the three tracks. For 2008-Act condominiums, § 66-27-414 requires only that assessments rest on an annually adopted budget; the statute contains no owner-ratification step and no owner-rejection mechanism, so a board can raise the budget without a member vote unless the recorded declaration or bylaws impose a cap or an approval threshold.¹⁰ That gap is worth flagging. The 2008 Act models itself on the Uniform Condominium Act, whose § 3-103(c) allows unit owners to reject a proposed budget at a meeting — and a rejected budget reverts to the last ratified one. Tennessee's version of § 66-27-414 drops that owner-rejection step entirely.¹¹ One override runs the other way: for residential units, § 66-27-414(g) gives the board power — notwithstanding any contrary declaration provision — to levy assessments to preserve the physical integrity of the condominium or to comply with governmental requirements.¹² For Horizontal Property Act communities and non-HPR planned communities, increases are governed entirely by the declaration and bylaws.¹³ Where a board acts outside the documents — by exceeding a cap the declaration sets or skipping a vote the bylaws require — the increase is exposed to challenge as a breach of the declaration, which Tennessee courts treat as a contract.

2C. Special assessments, the six-month priority lien, and foreclosure

Special assessments are authorized and limited by the declaration in every Tennessee community. A 2024 statute adds a narrow restriction: a homeowners' association levying a special assessment for a nonessential amenity must pass it by at least a two-thirds majority vote of the total membership and provide members with financing or a payment plan over a defined period — and it may not pursue foreclosure against the property or the member for nonpayment of such an assessment.¹⁴ The assessment lien matters most for 2008-Act condominiums. Under § 66-27-415, the association's lien is generally junior to a first mortgage recorded before the delinquency, but it gains priority over that first mortgage to the extent of common expense assessments based on the periodic budget that would have come due during the six months immediately preceding the enforcement action, not exceeding one percent of the maximum principal indebtedness of the first mortgage.¹⁵ The priority is lost if the unit owner or first lienholder gives the association written notice of its identity and address, and the association then fails — within thirty days after six months of assessments become delinquent — to notify the lienholder of the delinquency.¹⁶ A lien for unpaid assessments is extinguished unless enforcement begins within six years of the lien becoming effective.¹⁷ Horizontal Property Act communities and non-HPR planned communities rely on declaration-based liens without this statutory mortgage priority. In operation, the § 66-27-415 priority is a payment position in foreclosure proceeds — not a power to wipe out the first mortgage.¹⁸

Section 3: Assessment limits and procedures in practice

A. Regular assessment increase procedure

For 2008-Act condominiums, the board adopts a periodic budget at least annually and assesses against units per the declaration's allocations; the statute sets no ratification step and no fixed notice period for the increase itself, leaving notice and effective date to the documents (§ 66-27-414).¹⁹ For Horizontal Property Act communities and non-HPR planned communities, the budget and any increase follow the declaration and bylaws, including any notice and effective-date terms those documents impose.²⁰

B. Special assessment procedure

For 2008-Act condominiums and Horizontal Property Act communities, special assessment authority, notice, and any member-approval threshold are declaration-defined; the 2008 Act adds the residential physical-integrity power in § 66-27-414(g).²¹ For non-HPR planned communities, a special assessment for a nonessential amenity — defined to include features such as pools, tennis courts, and clubhouses — is statutorily conditioned on a two-thirds membership vote and a financing or payment-plan option under § 66-27-706, with all other special assessments governed by the declaration.²²

C. Caps, ceilings, and override mechanisms

Tennessee supplies no percentage cap on regular or special assessments for any of the three tracks; any ceiling is declaration-defined.²³ The only statutory override of the documents is the § 66-27-414(g) board power for 2008-Act residential condominiums to assess for physical integrity or governmental compliance regardless of contrary declaration language.²⁴

D. Notice, documentation, and disclosure tied to assessments

For 2008-Act condominiums, recording the declaration constitutes record notice of the assessment lien, and the priority portion is perfected without further recording (§ 66-27-415(d)).²⁵ The priority position depends on the association giving the § 66-27-415(b)(2)(B) delinquency notice to a first lienholder that has identified itself.²⁶ On request, the association must furnish a unit owner or mortgage holder a written statement of unpaid assessments within seven days, and that statement binds the association — supporting assessment disclosure on resale or refinance (§ 66-27-415(h)).²⁷ For Horizontal Property Act communities and non-HPR planned communities, notice and disclosure are governed by the declaration, bylaws, and the recorded lien against the unit.²⁸

Section 4: Recent legislative and judicial activity

4A. Recent bills

Two bills from recent sessions directly affect how Tennessee associations levy and collect assessments. The first established new protections for owners facing nonessential-amenity special assessments; the second adds mandatory fidelity bond coverage for association funds.

4B. Recent appellate rulings

The court of appeals recently weighed in on what happens when an association stops honoring the assessment obligations its own declaration created.

4C. Active legislative debates

The Tennessee legislature has considered a comprehensive Homeowners Association Act for single-family common interest communities more than once — and has not passed it, leaving non-HPR planned communities without a dedicated assessment statute.³² No bill amending the §§ 66-27-414 or 66-27-415 assessment, budget, or lien provisions moved forward in the 114th General Assembly.

Section 5: National positioning and related coverage

Tennessee occupies a middle position on the assessment-limit spectrum. At one pole sit statutory-cap states led by California, where Cal. Civ. Code § 5605(b) bars a board from imposing a regular assessment more than 20 percent greater than the prior year or special assessments that in the aggregate exceed 5 percent of budgeted gross expenses without the approval of a majority of a quorum of members.³³ A second model is the Uniform Act states with a priority assessment lien — the group Tennessee's 2008-Act condominiums join through the six-month, one-percent priority of § 66-27-415.³⁴ A third model is purely declaration-driven, which describes Tennessee's Horizontal Property Act communities and its non-HPR planned communities. Tennessee's distinctive feature is the vintage split: the January 1, 2009 line determines whether a condominium answers to the modern 2008 Act or the older Horizontal Property Act. For multi-state operators, the practical implication is that a single Tennessee portfolio can contain communities under three different rule sets, so collection strategy and lien posture must be set community by community.

Federal frameworks also bear on Tennessee assessments, including the Fair Debt Collection Practices Act when collection is outsourced, the Servicemembers Civil Relief Act for active-duty owners, and the Bankruptcy Code's treatment of assessment debts and liens.

1. Tennessee Code Ann., Title 66, Ch. 27 (no statutory percentage cap on assessment increases) ↩
2. Tenn. Code Ann. § 66-27-202 (applicability; January 1, 2009 cutoff) and §§ 48-51-101 et seq. (Nonprofit Corporation Act) ↩
3. Tenn. Code Ann. § 66-27-414 (assessments for common expenses; annual board budget; no ratification step) ↩
4. Tenn. Code Ann. § 66-27-415 (lien for assessments; six-month, one-percent priority over first mortgage) ↩
5. Cal. Civ. Code § 5605(b) (20 percent regular assessment cap; 5 percent special assessment trigger; member vote required to exceed) ↩
6. Tenn. Code Ann. § 66-27-414 (annual budget adoption; first assessment triggers ongoing annual obligation) ↩
7. Tenn. Code Ann. § 66-27-307(a) (allocation of common expense liabilities by the declaration) ↩
8. Tenn. Code Ann. §§ 66-27-111, -112, -114, -116 (Horizontal Property Act; bylaws, prorated expenses, lien) ↩
9. Tenn. Code Ann. § 48-53-102(a)(16) (power to impose dues and assessments) and § 48-60-202(b) (member approval of dues bylaw) ↩
10. Tenn. Code Ann. § 66-27-414 (no owner-ratification or owner-rejection mechanism for budget increases) ↩
11. Tenn. Code Ann. § 66-27-414; cf. Uniform Condominium Act § 3-103(c) (owner-rejection mechanism omitted from Tennessee version) ↩
12. Tenn. Code Ann. § 66-27-414(g) (residential board power to assess for physical integrity or governmental compliance, notwithstanding contrary declaration provisions) ↩
13. Tenn. Code Ann. §§ 66-27-111, -112, -114, -116 (Horizontal Property Act; declaration and bylaws control assessment increases) ↩
14. Tenn. Code Ann. § 66-27-706, added by 2024 Tenn. Acts ch. 691, HB2249/SB2150 (nonessential amenity special assessment; two-thirds vote requirement; foreclosure bar) ↩
15. Tenn. Code Ann. § 66-27-415 (six-month, one-percent priority over first mortgage for 2008-Act condominiums) ↩
16. Tenn. Code Ann. § 66-27-415(b)(2)(B) (loss of priority for failure to give delinquency notice within thirty days) ↩
17. Tenn. Code Ann. § 66-27-415(e) (lien extinguished if enforcement not begun within six years of lien becoming effective) ↩
18. Tenn. Code Ann. § 66-27-415 (priority is a payment position in foreclosure proceeds, not a power to extinguish the first mortgage) ↩
19. Tenn. Code Ann. § 66-27-414 (annual budget adoption; no statutory ratification step; notice and effective date left to governing documents) ↩
20. Tenn. Code Ann. §§ 66-27-111, -112, -114, -116 (Horizontal Property Act; budget increases follow declaration and bylaws, including notice and effective-date requirements) ↩
21. Tenn. Code Ann. § 66-27-414(g) (residential board power for physical integrity or governmental compliance assessments) ↩
22. Tenn. Code Ann. § 66-27-706, added by 2024 Tenn. Acts ch. 691, HB2249/SB2150 (nonessential amenity special assessment; two-thirds vote; payment-plan option required) ↩
23. Tennessee Code Ann., Title 66, Ch. 27 (no statutory percentage cap on regular or special assessment increases under any of the three tracks) ↩
24. Tenn. Code Ann. § 66-27-414(g) (board power to override declaration for physical integrity or governmental compliance) ↩
25. Tenn. Code Ann. § 66-27-415(d) (recording the declaration constitutes record notice; priority portion perfected without further recording) ↩
26. Tenn. Code Ann. § 66-27-415(b)(2)(B) (delinquency notice required to preserve mortgage priority when lienholder has identified itself) ↩
27. Tenn. Code Ann. § 66-27-415(h) (written statement of unpaid assessments within seven days on request; statement binds the association) ↩
28. Tenn. Code Ann. §§ 66-27-111, -112, -114, -116 (Horizontal Property Act; notice and disclosure governed by declaration, bylaws, and recorded lien against the unit) ↩
29. Tenn. Code Ann. § 66-27-706, added by 2024 Tenn. Acts ch. 691, HB2249/SB2150, 113th General Assembly (eff. July 1, 2024) ↩
30. 2026 Tenn. Acts ch. 731, HB2338/SB2326, 114th General Assembly (fidelity bond requirement for associations collecting assessment funds; eff. Jan. 1, 2027) ↩
31. Renegade Mountain Cmty. Club, Inc. v. Cumberland Point Condo. Prop. Owners Ass'n, Inc., No. E2024-00213-COA-R3-CV (Tenn. Ct. App. May 2, 2025) ↩
32. Tennessee General Assembly bill records (proposed Tennessee Homeowners Association Act for single-family communities, not enacted) ↩
33. Cal. Civ. Code § 5605(b) (20 percent regular assessment cap; 5 percent special assessment aggregate trigger; member-vote override required) ↩
34. Tenn. Code Ann. § 66-27-415 (six-month, one-percent priority assessment lien for 2008-Act condominiums) ↩