Real Property - As enacted, requires a homeowners' association that collects assessments for common expenses to obtain and maintain a blanket fidelity bond to insure the homeowners' association against losses resulting f, the official text

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                             PUBLIC CHAPTER NO. 731

                                                    SENATE BILL NO. 2326

                                                              By Yarbro

                                           Substituted for: House Bill No. 2338

                                                By Hemmer, Boyd, Hardaway

AN ACT to amend Tennessee Code Annotated, Title 66, relative to property owners' associations'
          responsibility to maintain fidelity bonds.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:

          SECTION 1. Tennessee Code Annotated, Title 66, Chapter 27, is amended by adding the
following as a new part:

          66-27-901.

                    As used in this part:

                              (1) "Board of directors" means the body, regardless of name, designated in
                    the declaration to act on behalf of a homeowners' association;

                              (2) "Declaration" means an instrument, however denominated, that creates a
                    homeowners' association, and amendments to that instrument, including restrictive
                    covenants, bylaws, and similar instruments governing the administration or operation
                    of a homeowners' association; and

                              (3) "Homeowners' association" or "HOA":

                                        (A) Means an incorporated or unincorporated association owned by, or
                              whose members consist primarily of, the owners of the residential property
                              covered by the declaration and through which the owners, or the board of
                              directors or similar governing body, manage or regulate the residential
                              subdivision; and

                                        (B) Includes a unit owners' association organized under§ 66-27-401.

          66-27-902.

                    A homeowners' association collecting assessments for common expenses shall
          obtain and maintain a blanket fidelity bond to insure the HOA against losses resulting from
          theft or dishonesty committed by the officers, directors, or persons employed by the HOA, or
          committed by any managing agent or employee of the managing agent. Such bond or
          insurance policy must provide coverage in an amount equal to the reserve balances of the
          association plus one-fourth (1/4) of the aggregate annual assessment income of such HOA;
          provided, that the minimum coverage amount must be ten thousand dollars ($10,000). The
          board of directors or managing agent may obtain such bond or insurance on behalf of the
          HOA.

          SECTION 2. This act takes effect January 1, 2027, the public welfare requiring it.
         SENATE BILL NO. 2326

PASSED:  March 26, 2026

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                                                            ~ANUY Mc~ .... A a. ■ .....,1 - - - -a~ I I "
                                               SPEAKER OF THE SENATE

                     CAMeftOIQ SEXTON, SPEAKER
                     HOUSE OF REPRESENTATIVES

I?:/- APPROVED this  day of Apr;I             2026

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                          BILL LEE, GOVERNOR