Does this apply to my association?
The requirement covers homeowners’ associations that collect common-expense assessments, including specified condominium unit owners’ associations.
Use a $10,000 minimum when preparing for this requirement. Do not apply a $1 million cap—the Tennessee law sets no maximum.
What coverage does my association need?
HOA requirements
Assessment-collecting homeowners’ association
- Does this apply to my association?
- Beginning January 1, 2027, an incorporated or unincorporated residential-subdivision association collecting assessments for common expenses.
- How much coverage do I need?
- Reserve balances + 25% of aggregate annual assessment income, subject to a $10,000 minimum. There is no statutory maximum cap.
- What should I prepare?
- The law does not say which reserve date to use or whether annual assessment income means budgeted, billed, or collected income. Its wording refers to both a bond and an insurance policy.
- Who and what must coverage include?
- Loss from theft or dishonesty by officers, directors, HOA employees, managing agents, or managing-agent employees.
- Are there exceptions or waivers?
- No member waiver, unit threshold, affordability exception, or nonresidential exception is stated. Collection of common-expense assessments is the trigger.
- When do I need coverage?
- Obtain and maintain beginning January 1, 2027. No grace period, fixed term, or cancellation notice is stated.
- What records do I need?
- The Act states no filing, certificate-delivery, retention, or regulator-enforcement procedure.
Condominium requirements
Covered condominium unit owners’ association
- Does this apply to my association?
- Beginning January 1, 2027, the definition expressly includes a unit owners’ association organized under § 66-27-401 that collects common-expense assessments.
- How much coverage do I need?
- Reserve balances + 25% of aggregate annual assessment income, with a $10,000 minimum and no maximum cap.
- What should I prepare?
- The definition specifically includes associations organized under § 66-27-401. Communities organized another way should check whether the law applies. The formula inputs and allowed policy form need confirmation from the statute and governing documents.
- Who and what must coverage include?
- Theft or dishonesty by officers, directors, association employees, managing agents, or their employees.
- Are there exceptions or waivers?
- No express waiver or unit threshold.
- When do I need coverage?
- Obtain and maintain coverage from January 1, 2027. There is no transition grace period.
- What records do I need?
- No government filing or certificate procedure appears in the Act.
How do I prepare to buy?
Before the effective date, check whether the association collects common-expense assessments and falls within the Act’s definition.
Add reserve balances to 25% of aggregate annual assessment income.
Raise any result below $10,000 to $10,000. Do not apply a maximum cap.
Before January 1, 2027, compare the policy form with the enacted law and governing documents.
Common Questions
When does the Tennessee requirement take effect?
It was enacted in 2026 and takes effect January 1, 2027.
Does Tennessee cap the required amount at $1 million?
No. Public Chapter 731 includes a $10,000 minimum but no maximum cap.
Are condominiums included?
The definition expressly includes unit owners’ associations organized under Tennessee Code § 66-27-401. Other condominium arrangements should check whether the definition covers them.
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