Tennessee • Reserve study / underfunding
Is your Tennessee condo's reserve underfunded — and does the state require funding?
A reserve study can read as reassuring while quietly showing your Tennessee building is years behind on saving for its roof, elevators, or façade. What matters is how funded the reserves actually are — and what Tennessee requires.
The short answer
Tennessee requires a reserve study and does not require the association to fund it. Tennessee's 2024 law mandates the study but NOT funding — a study can exist while reserves sit near zero, the state's signature trap. HOAs are excluded entirely. A thin reserve is the most common reason a special assessment lands later, so the study-versus-actual-balance gap is the number that matters. CondoSignal reads your reserve study and budget against Tennessee's rules. Free.Tennessee at a glance
Reserve study
Required
Reserve study (condos with $10,000+ in components), updated every 5 years — first deadline Jan 1, 2025
Reserve funding
Not required
Underfunding is legal here
Super-lien
Yes
Six months of common-expense assessments, capped at 1% of the first mortgage principal (condos)
Resale disclosure
Cancellation right
Narrow — generally none, except a 10-business-day right when a declarant-controlled association is late delivering § 66-27-503 information
What Tennessee requires
Tennessee's 2024 law mandates the study but NOT funding — a study can exist while reserves sit near zero, the state's signature trap. HOAs are excluded entirely. Whether a thin reserve is merely risky or actually out of compliance depends on that rule — which is the first thing to establish.
Why underfunding becomes an assessment
Any repair cost exceeding insurance proceeds plus reserves automatically becomes a common expense (§ 66-27-413) — a direct pipeline from a storm to a special assessment. No statutory cap. The 'percent funded' figure in the study, compared to the actual reserve balance, tells you how exposed you are.
What it means for collection and resale
A modest condo super-priority (§ 66-27-415), conditioned on notifying the lender; HOAs have no statutory lien beyond their documents. The condo resale package discloses the reserve amount (or 'none'), 24 months of minutes, insurance, litigation, and delinquency; HOAs have no statutory resale certificate.
Your rights in Tennessee
As a Tennessee owner, your reserve information and any approved special assessments should appear in the association's budget and resale disclosures (narrow — generally none, except a 10-business-day right when a declarant-controlled association is late delivering § 66-27-503 information). None of this is legal advice — confirm against the current statute and a licensed professional in your state.
What to check
- Find the reserve study's 'percent funded' figure.
- Compare the recommended contribution to what's budgeted.
- Confirm whether Tennessee mandates reserve funding — it doesn't, so the board can legally run reserves thin.
- Check the remaining life of the roof, elevators, and façade.
- Remember delinquent-owner debt carries a super-lien in Tennessee (Six months of common-expense assessments, capped at 1% of the first mortgage principal (condos)), which raises everyone's risk.
- Look for a reserve catch-up or a recent special assessment.
- Check the study's date — an old study understates today's costs.
Sources
- T.C.A. § 66-27-413 — insurance; shortfall as common expense(High)
- T.C.A. § 66-27-415 — lien (6-month / 1% super-priority)(High)
- T.C.A. § 66-27-503 — resale information package(High)
Educational only — not legal, financial, or engineering advice. Confirm against the current statute and, where it matters, a Tennessee-licensed professional.
Related guide
Tennessee reserve studies — the full guide →This page answers what to do right now. For how reserve studies works in Tennessee — the law, the process, and what to check before you buy or sell — read the full state guide.
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Every finding cites the exact page in your documents
“The board approved a $15,000-per-unit special assessment for façade repairs, payable over 12 months.”
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