Tennessee Horizontal Property Act: Rules for Pre-2009 Condos

This page is for owners in Tennessee condos created before January 1, 2009, and for anyone trying to work out whether their community is a "horizontal property regime." It covers which condos Tennessee's 1963 Horizontal Property Act still reaches, what it requires, which newer rules apply anyway, and how townhome developments fit in. For your specific situation, a licensed Tennessee attorney is the right resource. This is general information, not legal advice.

Which Tennessee condos are still under the Horizontal Property Act?

Generally, condos created before January 1, 2009, that have not elected into the newer Tennessee Condominium Act of 2008. The 2008 Act applies to condominiums created after that date, the Horizontal Property Act does not apply to them, and an older condo can elect into the 2008 Act (T.C.A. § 66-27-202).

Part 1 of chapter 27 opens: "This part shall be known as the 'Horizontal Property Act.'" (§ 66-27-101). Section 66-27-202(a) begins, "This part and parts 3-5 of this chapter apply to all condominiums created within this state after January 1, 2009", and § 66-27-202(b) adds that "Part 1 of this chapter does not apply to condominiums created after January 1, 2009".

How a regime came into being also matters. Under § 66-27-103(a), a horizontal property regime is established when a developer, the sole owner, or the co-owners of a building "expressly declare, through the recordation of a master deed or lease, or by plat," their "desire to submit their property to the regime established by this part". So the recorded master deed (or plat), and its recording date, is typically what shows which framework a community started under. A handful of 2008-Act sections also reach pre-2009 condos for later events; those are covered further down this page.

What the Horizontal Property Act itself requires

The Act's own text is brief, and much of it works by requiring the recorded bylaws to address certain subjects rather than spelling out rules itself.

• Recorded bylaws. Administration "shall be governed by bylaws" recorded with the master deed or declaration (§ 66-27-111), and the bylaws must cover at least five subjects, starting with the "[f]orm of administration" (§ 66-27-112(a)(1)).
• Meetings and voting. The bylaws must set out the "[m]ethod of calling or summoning the co-owners to assembly; that a majority of co-owners is required to adopt decisions; who is to preside over the meeting and who will keep the minute book" (§ 66-27-112(a)(2)). A "majority of co-owners" means "more than fifty percent (50%) of the co-owners" (§ 66-27-102(a)(9)).
• Changing the system of administration. "[T]he co-owners representing two-thirds (⅔) of the total apartments of the building" may modify it, but "[n]o such modification may be operative until it is embodied in a recorded instrument" (§ 66-27-112(b)).
• Common expenses. Co-owners "are bound to contribute pro rata toward the expenses of administration" and common-element upkeep (§ 66-27-114(a)), with no exemption "by waiver of the use or enjoyment of the common elements or by abandonment of the apartment" (§ 66-27-114(b)). The bylaws must state the "[m]anner of collecting" those expenses (§ 66-27-112(a)(4)).
• Unpaid assessments at a sale. If not paid before the sale or conveyance, they "shall be a lien against the apartment and shall be paid by the new owner of the apartment" (§ 66-27-116). That short section says nothing about foreclosure, priority, interest, or attorney fees; the 2008 Act's lien section is covered below.
• Financial records. The administrator or board keeps a book of receipts and expenditures (§ 66-27-113(a)), and it and the vouchers must be "available for examination by all the co-owners at convenient hours on working days that shall be set and announced for general knowledge" (§ 66-27-113(b)). More on how records requests work in Tennessee.
• Use of common elements. For an owner in compliance with the master deed, bylaws, charter and rules, "the council of co-owners may not deny that condominium owner use and enjoyment of the general common elements of the property" (§ 66-27-106(b)).
• Insurance and rebuilding. Co-owners "may, upon resolution of a majority, insure the building against risks" (§ 66-27-117), and "[r]econstruction shall not be compulsory where it comprises the whole or more than two-thirds (⅔) of the building" (§ 66-27-118(b)).
• Homestead. "[I]ndividual apartments in a horizontal property regime are declared to be homesteads within the purview of Constitution of Tennessee, Article XI, § 11" (§ 66-27-115).

Part 1 has no fine procedure, no meeting-notice rules beyond what the bylaws must cover, and no resale-disclosure requirements of its own. The master deed and bylaws fill much of that space, the 2008-Act sections that reach older condos cover fines and resale information, and other law can also apply, such as Tennessee's nonprofit corporation statutes for an incorporated association and federal law like the Fair Housing Act.

Which 2008 Condominium Act rules reach older Tennessee condos?

A short, specific list. Under § 66-27-202(a), named 2008-Act sections on association powers, fines, assessments, the lien, records, resale information, lawsuits and title matters apply to condos created before January 1, 2009. They govern only events after that date and, apart from one repair-assessment rule, don't override the existing master deed, bylaws or plats.

The limiting clause reads: "but those sections apply only with respect to events and circumstances occurring after January 1, 2009, and, with the exception of § 66-27-414(g), do not invalidate or supersede existing provisions of the master deed, master lease, declaration, bylaws or plats of those condominiums existing on January 1, 2009" (§ 66-27-202(a)). By topic:

• Fines and charges. Section 66-27-402(a)(11) allows late charges and, "after notice and an opportunity to be heard, levy reasonable fines for violations of the declaration, bylaws, and rules and regulations of the association." Subdivisions (a)(12)–(13) add "reasonable charges" for amendments, § 66-27-502 information and unit transfers. More on the hearing step: challenging an HOA fine in Tennessee.
• Budgets, rules, contracts and common areas. Section 66-27-402(a)(1)–(6) covers bylaws and rules, managers, litigation, contracts and regulating the common elements, including the power to "[a]dopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from unit owners" ((a)(2)). Subdivisions (a)(14)–(15) cover indemnifying officers and directors, directors' and officers' liability insurance, and assigning future income, and (a)(16) adds "any other powers conferred by the declaration or bylaws." Subdivisions (a)(7)–(10), (17) and (18) are not on the list.
• Repair and code-compliance assessments. For "residential units only, notwithstanding any provision to the contrary set forth in the declaration," the board may levy assessments to preserve the condo's physical integrity or meet governmental requirements, as a single assessment or reserves paid in installments (§ 66-27-414(g)). It is the one listed rule that § 66-27-202(a) excepts from its no-override language.
• Lien for assessments. The association has a lien for assessments and fines "from the time the assessment or fine becomes due," foreclosed by judicial action unless the declaration provides a power of sale (§ 66-27-415(a)(1)–(2)). In a foreclosure under title 35, chapter 5, the association is entitled to priority in the sale proceeds up to the budgeted common expense assessments that would have come due in the six months before an action to enforce the lien, "not exceeding one percent (1%) of the maximum principal indebtedness" of a lien secured by the first mortgage or deed of trust ((b)(2)). Unless specifically reserved in the declaration, the lien "is not subject to the statutory or other right of redemption, homestead, or any other exemption" ((b)(3)). It is extinguished unless enforcement begins within six years after it becomes effective ((e)); the prevailing party recovers costs and "reasonable attorney's fees" ((g)); and on written request, a statement of unpaid assessments is due to the unit owner or a mortgage holder within seven days and "is binding on the association" ((h)). Existing master deed and bylaw provisions are not superseded. More on the process: whether a Tennessee HOA can foreclose on a home.
• Records. "All financial and other records shall be made reasonably available for examination by any unit owner" and mortgage holders (§ 66-27-417), alongside the Horizontal Property Act's own book-examination rule (§ 66-27-113).
• Resale information. For units "restricted to residential purposes, unless expressly made applicable by the declaration" (§ 66-27-501), the association provides § 66-27-503 information within ten business days of a request from a unit owner, purchaser or lender, for "a reasonable fee" (§ 66-27-502(a)). It includes the governing documents, rules, budget with reserve statement, insurance, pending suits and 24 months of minutes (§ 66-27-503). An association that misses the deadline owes the party on whose behalf the request was made $250 after the first request and $500 if the information still isn't supplied within ten business days of a second request, plus costs including reasonable attorney's fees (§ 66-27-505(a)(1)). In that case, neither the purchaser nor the unit is liable for past-due assessments the information would have disclosed, provided the requesting party had no actual knowledge of them when the unit was acquired (§ 66-27-505(a)(2)). Part 5 also includes rules on developer deposit escrow and tenant notice in conversion buildings (§§ 66-27-506, 66-27-507).
• Lawsuits. Claims of "a wrong done by the association must be brought against the association and not against any unit owner," and being an owner, member or officer doesn't bar a unit owner from suing (§ 66-27-411).
• Title and structure. Separate parcels and taxation (§ 66-27-205), no zoning or building rule singling out the condo form (§ 66-27-206), eminent-domain awards (§ 66-27-207), the declaration generally prevailing over conflicting bylaws, plus severability (§ 66-27-303), and short-form unit descriptions (§ 66-27-304).

The § 66-27-203 definitions apply only "to the extent necessary in construing any of the sections listed in this subsection (a)," and § 66-27-202(a) extends nothing else in the 2008 Act to an older condo that hasn't elected in, though other Tennessee law can apply on its own terms.

How does a pre-2009 Tennessee condo opt in to the 2008 Act?

Two routes, both in § 66-27-202(c): amending and restating the existing master deed, bylaws and plat or plats, or specifically electing in the master deed, master lease or declaration. Either way, the condominium must also satisfy the requirements that apply to a condominium created under the 2008 Act.

The restatement route brings in parts 2–5 "in their entirety" and must meet "the requirements of subsection (b)"; the election route requires "satisfying all requirements applicable to a condominium created under this part and parts 3-5 of this chapter" (§ 66-27-202(c)).

Short of a full election, Part 1 does not invalidate a post-2009 amendment the 2008 Act would permit, but the amendment "must be adopted in conformity with the procedures and requirements specified by those instruments and by part 1 of this chapter" (§ 66-27-202(b)). An amendment granting a 2008-Act right or power also carries "all correlative obligations, liabilities, and restrictions" of that Act (§ 66-27-202(b)).

Part 1's two-thirds threshold for changing the system of administration, noted above, is one of those procedures, and the master deed and bylaws may add their own. More on how co-owner meetings work: attending HOA meetings in Tennessee.

Can a townhome community be a horizontal property regime?

It can be. The Act's definitions contemplate townhome-style projects: an "apartment" can be a free-standing building, and with "private elements" and a "townhouse corporation," a planned unit development can be created under the Act (§§ 66-27-102(a) and 66-27-103(b)). Whether a particular community is one depends on its recorded instruments.

The apartment definition includes "[a] separate free-standing building of one (1) or more floors" (§ 66-27-102(a)(1)(A)(i)(c)). "Private elements" means "the lot area upon which an apartment is located and the improvements located thereon," reserved in fee simple to that apartment, and they "shall exist only where each apartment in the project has a ground floor and there are no apartments located above or below the private element except the one (1) apartment located thereon" (§ 66-27-102(a)(12)). A "townhouse corporation" is "a not-for-profit corporation to be organized under the Tennessee Nonprofit Corporation Act," in title 48, "of which all co-owners shall be members where private elements are involved" (§ 66-27-102(a)(15)). Under § 66-27-103(b), "All planned unit developments shall require a declaration, bylaws, a plat showing private and common elements, a townhouse corporation, charter and an attorney's opinion."

Timing can matter too. Part 1 does not apply to condominiums created after January 1, 2009 (§ 66-27-202(b)), but the text does not say whether a planned unit development with private elements counts as a "condominium" for that purpose; a licensed Tennessee attorney can address how it applies to a specific community.

Frequently asked questions

Does the Horizontal Property Act set rules for HOA fines?

Not directly — Part 1 of the Horizontal Property Act contains no fine provisions. For events after January 1, 2009, § 66-27-202(a) extends § 66-27-402(a)(11) to older condos; the power it grants is to levy "reasonable fines" "after notice and an opportunity to be heard." The master deed and bylaws still matter, because § 66-27-202(a) leaves their existing provisions in place.

Can an older condo board levy a repair assessment the master deed doesn't allow?

For residential units, § 66-27-414(g) gives the board power to levy assessments "to preserve the physical integrity of the condominium or to comply with governmental requirements applicable to the condominium," and it applies "notwithstanding any provision to the contrary set forth in the declaration." Section 66-27-202(a) excepts § 66-27-414(g) from its rule that the listed sections leave an older condo's existing master deed, declaration and bylaw provisions in place, for events after January 1, 2009.

Can a co-owner stop paying dues by not using the amenities?

No. Section 66-27-114(a) binds co-owners to contribute pro rata toward administration and common-element upkeep, and § 66-27-114(b) provides that no co-owner may be exempted from contributing "by waiver of the use or enjoyment of the common elements or by abandonment of the apartment belonging to that co-owner or by any other means."

Sources

• Tennessee Code Annotated — official public access (§§ 66-27-101, 66-27-102, 66-27-103, 66-27-106, 66-27-111 to 66-27-118; §§ 66-27-202, 66-27-203, 66-27-205 to 66-27-207, 66-27-303, 66-27-304, 66-27-402, 66-27-411, 66-27-414, 66-27-415, 66-27-417; §§ 66-27-501 to 66-27-503, 66-27-505 to 66-27-507)