HOA and condo association foreclosure in Tennessee

HOA and condo collection rules in Tennessee, step by step

• Which Tennessee law applies

  Check your master deed or declaration

  Condominiums are governed by the Tennessee Condominium Act of 2008 in Title 66, Chapter 27. Older condos were created under the earlier Horizontal Property Act in the same chapter, and how much of the 2008 Act reaches them was not confirmed. We found no Tennessee statute on liens or foreclosure for subdivision HOAs that are not condos, so their rights come from the recorded declaration.

  Tenn. Code Ann. § 66-27-415

• The condo lien starts when a charge is due

  From the due date

  The association has a lien for any assessment or fine from the time it becomes due. Unless the declaration says otherwise, fees, late charges, fines and interest are collected as assessments, and if an assessment is payable in installments, the full amount becomes a lien when the first installment is due.

  Tenn. Code Ann. § 66-27-415(a)(1), (4)

• Court foreclosure, or power of sale if the declaration says so

  Notice before the first newspaper ad

  The association forecloses through a court case unless the declaration lets it foreclose like a deed of trust with a power of sale. In that case it must mail notice to you and to every lienholder of record before the first published notice of sale. Mailed notice counts as received 3 days after it is sent, so watch your mail at the unit and at any address you gave the association.

  Tenn. Code Ann. § 66-27-415(a)(2) to (4)

• No homestead or redemption shield unless your declaration gives one

  Before any sale

  The statute says the condo lien is not subject to any statutory or other right of redemption, homestead or other exemption unless the declaration specifically reserves it. Read your declaration for any such reservation, and get legal help early.

  Tenn. Code Ann. § 66-27-415(b)(3)

• Priority: behind an earlier mortgage, with a capped payment priority

  When a foreclosure sale happens

  The lien comes ahead of other liens except those recorded before the declaration, property taxes, and a first or other mortgage recorded before the dues became delinquent. In a foreclosure by the association or a lender, the association is paid first from the sale for up to 6 months of regular budget dues, but never more than 1 percent of the first mortgage's maximum principal. An association foreclosure does not wipe out your earlier mortgage.

  Tenn. Code Ann. § 66-27-415(b)(1), (2)

• The lender notice rule can cancel that priority

  30 days after 6 months of dues are late

  If you or your lender gave the association the lender's name and address in writing, the association must send the lender written notice of the delinquency within 30 days after 6 months of dues become delinquent. If it does not, it loses its payment priority over that mortgage. Amounts above the priority must be recorded in the county lien book to be perfected.

  Tenn. Code Ann. § 66-27-415(d)

• Payment plans, fee caps and fines

  Before the debt grows

  We found no Tennessee statute that requires a payment plan, caps late fees or collection costs, or sets a minimum debt before foreclosure. Fines are part of the condo lien once imposed. Ask in writing for an itemized ledger and the collection policy, and ask for a payment plan in writing.

  Tenn. Code Ann. § 66-27-415(a)(1)

Common questions in Tennessee