Can a Tennessee HOA or Condo Foreclose Over Dues?

Whether a Tennessee community association can foreclose for unpaid dues depends on whether you live in a condominium or a non-condo HOA. Condos run on the 2008 Act's unique lien framework; non-condo HOAs rely entirely on the recorded covenants. For your specific situation, a licensed Tennessee attorney is the right resource. This is general information, not legal advice.

Condominiums: T.C.A. § 66-27-415

For condominiums under the Tennessee Condominium Act of 2008, Section 66-27-415 gives the association a statutory lien "on a unit for any assessment levied against that unit or fines imposed against its unit owner from the time the assessment or fine becomes due." Two distinctive features:

• The lien reaches fines as well as assessments
• The lien "may be foreclosed by judicial action" — there is no nonjudicial power-of-sale shortcut

The Tennessee 1%-of-mortgage cap

Tennessee's super-priority structure is the most distinctive in the country. The association is entitled to priority in foreclosure proceeds for the common-expense assessments that would have become due, without acceleration, during the six months immediately preceding the lien-enforcement action — but capped at one percent (1%) of the maximum principal indebtedness of the first mortgage or deed of trust.

So Tennessee imposes a double cap:

1. Six months of common-expense assessments
2. And 1% of the first mortgage's maximum principal indebtedness

Whichever is lower applies. On a $400,000 mortgage, the association's priority is capped at $4,000 even if six months of assessments would otherwise exceed that. No other state in the country uses this exact dual-cap structure.

Six-year limitations period

Tennessee gives the association more time than many states to enforce its lien: "A lien for unpaid assessments is extinguished unless proceedings to enforce the lien are instituted within six (6) years after the date the lien for the assessment becomes effective."

That is a relatively long window — compare Missouri's 3 years and Maine's 6, for example. But it is still a real outer limit, and old, stale lien claims fall away by operation of the statute.

Non-condo HOAs: rely on the covenants

For non-condo HOAs in Tennessee, there is no Condominium Act equivalent. Whether and how the association can record a lien and foreclose depends almost entirely on the recorded CC&Rs:

• The CC&Rs must expressly authorize the association to lien the home for unpaid assessments
• The CC&Rs must specify the procedure for recording and enforcing the lien
• Without express CC&R authority, there is generally no statutory backup

Most Tennessee non-condo HOA declarations do grant lien rights, but the precise scope and procedure depend on the documents. The Tennessee Nonprofit Corporation Act (T.C.A. Title 48) governs the entity but does not create a statutory lien.

A 2024 protection that reaches non-condo HOAs: nonessential-amenity special assessments

One of the few statutory protections that reaches general (non-condo) homeowners' associations is T.C.A. § 66-27-706, added by 2024 Tenn. Acts, ch. 691, effective July 1, 2024 — it sits in Part 7, the "Homeowners' Association" part of Title 66, Chapter 27. It addresses special assessments for a "nonessential amenity" (think a new pool, tennis court, or clubhouse). The statute provides that an association seeking such a special assessment must "[p]ass the assessment by at least a two-thirds (2/3) majority vote of the total members" and "[p]rovide members with financing or a payment plan over a defined period of time."

Most important for foreclosure: the statute states that "[i]f a member of the homeowners' association fails to pay a special assessment for a nonessential amenity, then the homeowners' association shall not take a foreclosure action against the property or the member for failure to pay the special assessment." In other words, an unpaid nonessential-amenity special assessment is, by statute, not a basis for foreclosure in a Tennessee HOA.

What people generally do

In a Tennessee assessment-debt situation, a few points commonly matter:

• Whether the community is a condominium or non-condo HOA — the framework is fundamentally different.
• For condos, a written payoff and the association's records show what is owed.
• For condos, the 1% cap against the first mortgage's maximum principal indebtedness — the priority slice may be much smaller than six months of assessments.
• For condos, whether any unpaid amount is more than six years old — § 66-27-415 extinguishes liens not timely enforced.
• For non-condo HOAs, the CC&Rs are where the association's authority to lien for what it is claiming is defined.
• Disputed fines and undisputed assessments are treated separately — though in condos the lien reaches both.
• Consult a licensed Tennessee attorney early, while options remain open

Sources

• T.C.A. § 66-27-415 — Lien for assessments
• T.C.A. § 66-27-706 — Special assessment levies for nonessential amenities; foreclosure prohibited (2024)
• T.C.A. Title 66, Ch. 27 — Condominium Act of 2008