In April 2026, Tennessee Governor Bill Lee signed a new bill to protect homeowners from fraud and theft by a Home Owner’s Association (HOA) or HOA committee member. According to WKRN News 2, the bill was co-sponsored by Tennessee Representative Caleb Hemmer and Senator Jeff Yarbro in response to allegations against the Grasser Property Management Inc. These allegations claim that the company stole thousands of dollars from HOAs they managed in Middle Tennessee.
As a result, the act amends Tennessee Code Title 66 by requiring all HOAs to have a blanket fidelity bond to guarantee financial responsibility. Starting on January 1, 2027, Tennessee HOA board of directors or managing agents must purchase a minimum $10,000 surety bond.
What Is the New TN HOA Fidelity Bond Requirement?
If you’re a Tennessee HOA manager, your required bond coverage will be calculated based on the HOA’s size, income levels and financial activity. The fidelity bond amount must be equal to the HOA’s reserve balances plus a quarter of its aggregate annual assessment income.
Here’s an example of how to estimate your required bond amount:
$50,000 Reserve Balances + 0.25*$100,000 annual income = $75,000 bond
Either boards of directors or managing agents can purchase the bond on behalf of the HOA.
How Do HOA Fidelity Bonds Work?
Tennessee HOA fidelity bonds are a legal agreement between three parties:
- Principal: The HOA manager/owner that needs the bond
- Obligee: The entity requiring the bond
- Surety: The company issuing the bond
Fidelity bonds hold the principal financially responsible for any damages. In this case, the principal is the Tennessee HOA manager who needs the bond.
If the HOA or any of its board members, employees, or officers:
- commits fraud,
- misuses funds, or
- steals from the reserve,
harmed parties like homeowners, can file a claim on the fidelity bond. The surety investigates valid claims and pays harmed parties. Then, unlike insurance, the principal must reimburse the surety.
We’ll update this page with more information on how to get the exact bond you need before this bill’s effective date of January 1, 2027.