Tennessee spent years on the "no reserve mandate" list. That changed on January 1, 2024, when a new law took effect requiring condominium boards to obtain reserve studies. For buyers, it is a genuinely useful development — a missing study is now a likely legal violation rather than just a best-practice gap. But the law has two limits that matter as much as the mandate itself: it does not require boards to actually fund reserves, and it does not apply to HOAs at all.

Here is what the law does, what it does not do, and how to read it during diligence.

What the law requires

The reserve-study requirement was enacted in 2023 (SB863/HB750) and codified at T.C.A. §66-27-403(g), effective January 1, 2024. Its terms:

• Who is covered: A board of directors of a unit owners' association that oversees common elements with an aggregate replacement cost exceeding $10,000 — effectively all but the smallest condos. It applies under the Condominium Act of 2008 and reaches older condos prospectively.
• The deadline and cycle: If the board had a reserve study done on or after January 1, 2020, it must update that study within five years of the original and at least every five years after. If it had no study since January 1, 2020, it had to obtain one on or before January 1, 2025, then update it every five years.
• Distribution: The board must make the study available to all owners by email or by posting it to the community website.

A condo over the $10,000 threshold with no study, or an overdue one, is now likely out of statutory compliance — a clear red flag rather than a soft one. The reserve study has become a hard line a buyer can check against.

What the law does not require: funding

This is the critical caveat. The law mandates the study, not the funding. Tennessee does not require the board to fund reserves to the study's recommendation, or to fund them at all. Funding remains a budget decision, subject to the declaration.

That creates the most common Tennessee reserve trap: a condo that has dutifully obtained a reserve study while the reserve balance sits near zero. The study exists; the money does not. The related budget disclosure (§66-27-503(4)) requires the budget to state the reserve amount — or that there is none — and whether a study was done and where it is available, which means a board can lawfully report "no amount" reserved.

So the right way to read a Tennessee reserve study is in two steps:

1. Does a current study exist and was it distributed? (the compliance question)
2. Is the reserve account actually funded toward the study's recommendation? (the risk question)

A "yes" on the first and a "no" on the second is exactly the situation where future capital work arrives as a special assessment.

HOAs are not covered

The mandate is in the Condominium Act, so planned-community HOAs are excluded. An HOA with no reserve study and no reserve funding is entirely legal in Tennessee. If you are buying in a planned community rather than a condominium, you do not get this protection — you have to infer reserve adequacy from the CC&Rs, the budget, and the age and condition of the common elements the association maintains (roads, drainage, amenities, perimeter walls).

This is one more place where Tennessee's condo-versus-HOA distinction drives the diligence. The same buyer, in the same county, gets a reserve-study entitlement as a condo owner and nothing as an HOA owner.

Why funding matters so much in Tennessee

Reserves are not an abstraction in Tennessee — they are the buffer between a storm and your wallet. Under T.C.A. §66-27-413, any repair cost above insurance proceeds plus reserves is a common expense spread across all owners. With severe convective storms (tornado, wind, hail) the dominant hazard, percentage wind/hail deductibles increasingly common, and no state FAIR Plan to backstop hard-to-place coverage, the gap between a claim and what the policy and reserves cover lands directly on owners.

A reserve study that ignores Tennessee's actual hazard mix — roof and cladding cycles, glazing and envelope, and in West Tennessee the seismic vulnerability of older masonry — can technically satisfy §66-27-403(g) while still understating what the building needs. Read the study's component list against the building's real exposure, not just its bottom-line number.

What to check during diligence

• Confirm a reserve study exists for the condo (required over the $10,000 replacement threshold)
• Confirm it is current and on the five-year update cycle, and that it was distributed to owners
• Read the §66-27-503(4) budget disclosure of the reserve amount
• Compare the funded balance to the study's recommended contribution — the gap is your special-assessment signal
• Confirm the study models storm and (in West Tennessee) seismic exposure
• Read the minutes for any reserve-funding or special-assessment discussion
• For an HOA, infer reserve adequacy from the CC&Rs, budget, and component age — no study is owed

This article describes Tennessee's reserve-study law in general terms and is not legal or financial advice. The exact codification and any later technical amendments should be confirmed against the official Tennessee Code, and a specific building's situation may warrant professional review. CondoSignal reviews the documents you upload and links every finding to the exact page, so you can see whether a reserve study exists, whether it is current, and whether reserves are actually funded before you commit to a purchase.