Tennessee Reserve Study Requirements: What the Law Requires of Condominiums

When we first wrote about Senate Bill 863 in 2023, it was a proposal. It is now law. Public Chapter 205, enacted from SB 863 and HB 750 and effective January 1, 2024, added a reserve study requirement to the Tennessee Condominium Act of 2008. Condominium associations with common elements worth more than $10,000 must have a professional reserve study, update it at least every five years, share it with owners and review their reserve funding every year.

The enacted version differs from the bill as introduced, and some summaries online still quote the old dates. This guide sets out what the statute actually says, who it covers, and where associations stand now that the first deadline has passed. For how we prepare studies in the state, see our Tennessee reserve study page.

Who the Law Applies To

The requirement sits in Tennessee Code Section 66-27-403(g), which governs the board of directors of a unit owners' association under the Condominium Act of 2008. It applies where the board oversees common elements with an aggregate replacement cost exceeding $10,000. Because a single roof or parking lot clears that threshold, it captures nearly every condominium with shared property.

The statute exempts three situations:

• A board still controlled by the declarant (developer)
• A condominium titled to a single owner
• A condominium owned by a husband and wife as tenants by the entirety

Two groups fall outside the law altogether. Single-family HOAs and planned communities are not covered, because Tennessee has no comprehensive HOA statute; their boards work from governing documents and the Tennessee Nonprofit Corporation Act. Older condominiums created before the 2008 Act took effect on January 1, 2009 are governed mainly by the Horizontal Property Act, and boards of those communities should ask counsel whether the requirement reaches them. Lenders and buyers will expect a study either way.

The Deadlines and the Five-Year Cycle

The statute sets two tracks, depending on whether the association already had a study:

• Study conducted on or after January 1, 2020. The board must have an updated study within five years of that study's date, and at least every five years after.
• No study since January 1, 2020. The board must have had a study conducted on or before January 1, 2025, and must update it every five years.

Note the dates. The bill as introduced used January 1, 2023 and January 1, 2024, and several websites still repeat them. The enacted law uses 2020 and 2025.

In practice, for 2026 that means:

• An association that had no study by January 1, 2025 is out of compliance and should commission one now.
• A study dated in 2020 was due for its update in 2025; one dated in 2021 is due this year.
• Every association is now on a rolling five-year clock measured from its last study.

What Counts as a Reserve Study in Tennessee

Tennessee did not leave the term to interpretation. Section 66-27-203 defines a reserve study as an analysis that must be:

• Prepared to the latest edition of CAI's Reserve Study Standards, or similar standards from another nationally recognised organisation
• Prepared by a reserve specialist credentialed through CAI or a similarly recognised organisation, or by a licensed engineer or architect
• Performed or updated within the last five years
• Covering the remaining useful life and estimated replacement cost of each separate system and component of the common elements

The stated purpose is to tell owners and the board how much should be maintained from year to year in a fully funded repair and replacement reserve, so as to minimise the need for special assessments.

That definition rules out a board member's spreadsheet or a contractor's roof quote. A compliant study has the five parts CAI requires: a component inventory, a condition assessment, life and valuation estimates, the fund status expressed as percent funded, and a funding plan. Our overview of what a reserve study is walks through each.

Three Ongoing Duties

Beyond the study itself, subsection (g) imposes continuing obligations on the board:

• Share it. A copy of the reserve study must be made available to all owners, by email or by posting it on the community website.
• Review funding annually. The board must review the reserve funding each year for adequacy, which means comparing the actual contribution and balance against what the study recommends.
• Keep the cycle. Each update resets the five-year clock.

Tennessee's resale disclosure rules already require an association to tell a prospective purchaser the amount budgeted for repair and replacement reserves, whether a study of their adequacy has been done, and where it can be found, so the study is visible at every sale.

What the Law Does Not Require

The statute is deliberately narrow. It does not set a minimum funding level or percentage, does not require the association to adopt the study's funding plan, and does not require any filing with the state. What fills the gap:

• Fiduciary duty. Elected directors must exercise ordinary and reasonable care, and a board that receives a study showing a shortfall and does nothing has a harder time meeting that standard.
• Governing documents. A declaration or bylaws may impose funding requirements the statute does not.
• Lenders. Fannie Mae and Freddie Mac condominium standards require at least 10% of assessment income to go to reserves, rising to 15% for loan applications from January 4, 2027, unless the association follows the highest funding level in a study under 36 months old. See our guide to condo reserve studies.

Our guide to underfunded HOA reserves covers what to do when the annual review shows a gap.

Tennessee Compliance Checklist

• Confirm the association is a unit owners' association under the 2008 Act and not exempt
• Confirm the date of the last reserve study and calculate the five-year due date
• Confirm the study was prepared by a credentialed reserve specialist or licensed engineer or architect, to CAI standards
• Confirm the study has been emailed to owners or posted on the community website
• Record the annual reserve funding review in the board minutes
• Update the resale disclosure information to reference the current study

Frequently Asked Questions

• Does Tennessee require reserve studies? Yes, for condominium associations under the 2008 Act whose common elements exceed $10,000 in replacement cost. Single-family HOAs are not covered.
• We missed the January 1, 2025 deadline. What now? Commission a compliant study as soon as possible and document the board's decision. The obligation does not lapse; it continues until the study is done.
• Can a board member prepare the study? No. The statutory definition requires a credentialed reserve specialist or a licensed engineer or architect.
• Do we have to fund reserves at the level the study recommends? The statute does not mandate it, but the board must review funding annually for adequacy, and governing documents and lender rules may require more.

How Reserve Study Group Can Help

Our Tennessee studies are prepared by credentialed Reserve Specialists to CAI's standards, which is exactly what Section 66-27-203 requires. If your association's study is approaching five years old, or you never had one before the 2025 deadline, request a proposal and our Tennessee team will be in touch

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