What every HOA Board Member Should Know: The Law of Homeowners Associations in Tennessee
There are over 350,000 homeowners associations in the United States. There are: • Over 40 million households nationwide affected by HOAs • An estimated 4800 HOAs in Tennessee • An estimated 968,000 Tennessee residents governed by HOA
Functions of the HOA• Care and upkeep of Common Areas
• PUD/Condo- maintenance, moving, repairs and replacement
• Enforcement of community standards and CC&R’s
• Collection of annual or special assessments or dues
Governing Documents• Charter
• Declaration of Covenants, Conditions and Restrictions(CC&Rs)
• Rules and regulations
What do the Charter and Bylaws lay out?• Non Profit Corporation
• Voting Rights and Procedures
• Rights and Responsibilities
• Board of Directors
What do the CC&Rs define and explain?• Land or lots subject to
• Common Areas
• Restrictions, terms and conditions
• Rights and responsibilities of owners
Enforcement of CC&Rs• Property owners have a fundamental right to the free use and enjoyment of their property. Hughes v. New Life Dev. Corp, 387 S.W.3d 453(Tenn. 2012)
• However, land owners may voluntarily enter into agreements with other land owners to restrict the use of their property in a way that is mutually beneficial. See id at 475.
Restrictive covenants are in essence contractual obligations. Hughes, at 475.
• Established rule of law that a person owning a body of land may sell portions thereof and make restrictions as to its use for the benefit of himself as well as those to whom he sells other potions of the land. Carr v. Trivett, 143 S.W. 2d 900 (Tenn. 1940)
Interpretation of CC&Rs• Rules governing the interpretation of restrictive covenants are generally the same as those applicable to contracts. Aldridge v. Morgan, 912 S.W. 2d 151 (Tenn. Ct. App. 1995)
• The primary task is to determine the intention of the parties as expressed by the plain and ordinary meaning in the covenants. Bernier v. Morrow, No. M2012-01984-COA-R3-CV, 2013 WL 1804072 (Tenn. Ct. App. Apr. 26, 2013
• However, because restrictive covenants are in derogation of the right to freely use and enjoy one’s property, they are strictly construed. Williams v. Fox, 219 S.W.3d 319 (Tenn. 2007)
• Courts resolve any ambiguities in a manner which advances the unrestricted use of the property. Williams at 324.
• Courts refrain from extending a restrictive covenant to any activity not clearly and expressly prohibited by its plain terms. Id.
• When the terms of a covenant may be construed more than one way, the courts must resolve any ambiguities against the party seeking to enforce the restriction. Id.
Community Wide Standard• The law does not require that restrictive covenants be specific in their criteria. Avalon Sections 4, 6 & 7 Homeowners Ass’n. v. Chaudhuri, 2014 WL 2949458 (Tenn. Ct. App 2014)
• When restrictive covenants establish a review committee but do not contain specific criteria for the committee to follow, the validity of the criteria and the committee’s interpretation will be judged by a standard of reasonableness. Id
Common HOA Disputes• Disputes with Developer
• Upkeep and maintenance of homes and common areas
• Violations of use restrictions
• Commercial/Business use of home
• Dues and assessments
HOA Board Actions and Decisions• Generally, courts will not disturb a decision by a homeowner association unless it is shown that the association acted unreasonably or in bad faith. Id.
• The burden of proof is on the homeowner to show that the HOA acted unreasonably or without good faith. Id.