The Tennessee legislature enacted the Horizontal Property Act and the Tennessee Condominium Act that govern all homeowner associations in the state. The laws are codified and are located in Chapter 27 (Horizontal Property) of Title 66 (Property) of the Tennessee Code. The law makes it mandatory that the members of associations must only be owners of property in the association.
Home and unit owners' associations exist to preserve and promote the joint interests of owners. To legally do this, the associations must: adopt bylaws, rules and regulations; adopt budgets and collect assessments; hire managing agents, etc.; litigate proceedings on behalf of the association or two or more members; make contracts; incur liabilities; regulate common property; and acquire appropriate insurance coverage.
Associations are required to honor the property rights of all owners as long as those owners actively observance all by-laws, charters, rules and regulations.
Home and unit owners' associations create a set of by-laws in accordance with law. Those by-laws, at minimum, include: a description of the number, titles, qualifications, elections and powers of board members; the process of delegating board powers to agents; the method of amending the by-laws; the procedure for calling membership meetings; the manner of collecting assessments from members; and property surveillance.
The association board of directors are either elected by the members or appointed by declaration. When elected, the legal responsibility of the board requires it to exercise ordinary and reasonable care. When appointed, the legal responsibility of the board requires it to exercise fiduciary care.
Any member of the board can be removed, with or without cause, if two-thirds of the members of the association vote for the removal from officer.
The association is mandated by law to hold a property insurance policy covering all common property at no less than 80 percent of the replacement cost at the time of purchase and a liability insurance policy with medical payments that covers occurrences of death, bodily injury and property damage.