2014 Tennessee Legislative Update — HB2060/SB2198
February 7, 2014
We switch from a federal case on takings law to a bill that was filed in the Tennessee General Assembly on January 23, 2014: http://wapp.capitol.tn.gov/apps/BillInfo/Default.aspx?BillNumber=SB2198. HB 2060/SB 2198, as proposed, would prohibit homeowners associations and condominium associations from:
(1) Prohibiting any person from parking on any public street located within any county or municipality of this state unless expressly authorized by the legislative body of the county or municipality;
(2) Penalizing or fining any persons in an amount exceeding the required monthly amount of dues owed by persons owning separate lots or units within the respective homeowners’ association; and
(3) Attaching an assessment lien on any real property in this state unless the homeowners’ association or its designee demonstrates to a court by clear and convincing evidence that a person owning a separate lot or unit within the homeowners’ association is past due on required monthly payments owed to the homeowners’ association.
Unless expressly authorized by the legislative body of the county or municipality, this bill prohibits any governing document of a homeowners’ association from including a limitation or prohibition against the display of any political sign on privately owned property within the boundaries of the respective homeowners’ association.
The requirements of this bill would apply retroactively unless prohibited by Article XI, Section 2 of the Constitution of Tennessee, Article 1, Section 10 of the Constitution of the United States, or some other provision of either the state or federal constitution.
Functionally, we are not concerned about items (1) and (2). An association has no control over a public street. Thus, it cannot prohibit individuals from parking on public streets. This has always been our opinion. Charging late fees in amounts exceeding the assessments is likely usurious and therefore impermissible.
Item (3) is horribly thought out.
One of the primary tools for associations to collect delinquent assessments is the ability to file liens. Properly written CCRs and master deeds contractually provide for a lien for delinquent assessments. The Tennessee Condominium Act of 2008 provides in Tenn. Code § 66-27-415 that condominiums have a secured lien on units for delinquent assessments. Hundreds of CCRs, master deeds, and declarations have been recorded including such liens. Thousands of liens have been recorded by Associations throughout this state. Yet, this bill, if passed, would nullify each of these liens, retroactively, unless each and every association can demonstrate to a court, by clear and convincing evidence, that the person owning the lot or unit is actually delinquent. This provision is not going to reduce the recordation of liens in Tennessee. It will only result in the increase in filed lawsuits as associations in Tennessee become required to collect delinquent assessments through the judicial system. Once the Associations obtain their due judgment, then they will record judgment liens.
At this point the bill is in subcommittee. Hopefully, it will die there.
Tags: assessments, association, board of directors, CCRs, condominium, condominium association, Declaration of Covenants Conditions and Restrictions, hb 2060, hb2060, HOA, homeowner, homeowner association, Horizontal Property Act, laws, legislative, Master Deed, sb 2198, sb2198, Tenn. Code 66-27-101, Tennessee, Tennessee Condominium Act, tn, update