Homeowner to Manage HOA in TN

Started by KenJ5 • 6 replies • 3498 views

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KenJ5 (Tennessee)
Posts: 1

Posted:

Hello. I have a few questions as it relates to a homeowner managing an HOA in Tennessee while the HOA is under the control of the developer. Let me thank you in advance for you help.

1. Is this generaly legal in the state of tennessee? Where can I go to validate if it is legal or not?

2. I am a builder who is considering taking of the manager role of the HOA. The HOA will pay would pay 75% of my salary, the developer will pay the balance. I do buy lots from the developer in this small subdivision and build custom houses. I also build spec homes for the developer from time to time. Is this in any way a conflict of interest as it relates to me managing the HOA. Is this legal in the state of Tennessee?

3. Where can I find the state laws that govern HOAs in TN?

Thanks again.

SteveM9 (Massachusetts)
Posts: 3,699

Posted:

You wont find a way to validate it as legal, because its not illegal.

Yes, its a conflict of interest, but a conflict of interest is not illegal, just not a good idea. Depending on your situation, the members may benefit from your conflict of interest, then again, they may not. It all depends on you, your ethics, your competency, etc.

GlenL (Ohio)
Posts: 5,491

Posted:

Quote:

3. Where can I find the state laws that govern HOAs in TN?

Thanks again.

There doesn't seem to be any laws regarding HOA's in Tennessee. Indeed the only thing I found was Title 66 - 27 The Horizontal Property Act which deals apparently with condominiums however I couldn't find a link that would actually display the law and Tennessee has possibly the worst state website I have ever seen.

Studies show that 5 out of 4 people have problems with fractions

MelissaP1 (Alabama)
Posts: 13,836

Posted:

My suggestion is that you become a Management company. That may be your best solution to the situation. This way you have a license and insurance. This may help with tax reasons as well. The Developer can have a homeowner in charge of their HOA on their behalf. I believe this is in the documentation that the developer can assign board members of their choosing. I'd recommend getting a copy of some Convenants & Restrictions and Article of Incorporation to review. They are usually the SAME format for the most part except after the HOA gets turned over to the owners. That's when the voting structure changes to no more "A/B" references.

Our HOA if the owners did NOT want to manage themselves, they could turn the HOA to a management company. This is where you could step in. There are some HOA's that would rather hire a Management company in conjunction with having their own board. The Management will still answer to the board but are paid.

There was a possibility that my HOA wanted to disband and hire me as their official manager. It was a serious consideration of mine. I would have liked to have done it. However, the question of how much I would have to raise the dues to cover my salary would NOT have gone over well...

Former HOA President

CharlesB17
Posts: 112

Posted:

Most States require you to be a licensed CAM if you recieve one copper penny for your services. I would suggest you consult an attorney before you start this venture!

DonnaS (Tennessee)
Posts: 5,671

Posted:

Glen,

You are correct, there are no HOA laws in Tn. The only regulations are for Condos and Time Shares.

CharlesB17
Posts: 112

Posted:

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.
Powers
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.
By-Laws
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.
Board
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.
Insurance
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.
.References
Michie's Legal Resources: Chapter 27 (Horizontal Property) of Title 66 (Property) of the Tennessee Code
C&P from another site

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