Does a Tennessee HOA need a fidelity bond? Yes. Under Public Chapter 731 (SB 2326 / HB 2338), every Tennessee homeowners' association that collects assessments must carry a blanket fidelity bond starting January 1, 2027. The bond must equal the association's reserves plus 25% of its annual assessment income, with a $10,000 minimum.
Public Chapter 731 adds a new part to Tennessee Code Annotated, Title 66, Chapter 27. Governor Bill Lee signed it on April 23, 2026. It passed with bipartisan sponsorship, carried by Sen. Yarbro and Rep. Hemmer.
The law has three core rules:
The law accepts a "bond or insurance policy." That means a commercial crime policy written for the association can satisfy the requirement if the limits and covered parties match.
The law applies to any HOA that collects assessments for common expenses. That covers most Tennessee subdivisions with dues, amenities, or shared maintenance.
Size does not matter. A 20-lot neighborhood with $15,000 in annual dues falls under the same rule as a 600-home master-planned community.
The bond must protect the association against theft or dishonesty by anyone who touches the money. The statute names five groups:
| Covered party | Why it matters |
|---|---|
| Officers | Treasurer and president often sign checks |
| Directors | Board members approve spending and vendor contracts |
| Association employees | Staff who collect dues or pay bills |
| Managing agent | The property management company itself |
| Managing agent's employees | The bookkeeper or community manager handling your account |
The last two rows are where many existing policies fall short. A basic crime policy may only cover the association's own employees. Boards that use a management company should confirm the bond names the manager and its staff.
The deadline is January 1, 2027. Bonds take time to underwrite, so start now.
That last step matters. Your required limit changes every time reserves or dues change. A bond that complies in January can fall short by year end.
January 1, 2027. Public Chapter 731 was signed on April 23, 2026.
$10,000. Most associations will need more, because the limit equals reserves plus 25% of annual assessments.
Yes. The law includes unit owners' associations organized under T.C.A. § 66-27-401.
Yes, if the limit meets the formula and it covers all required parties. The statute allows a "bond or insurance policy."
The board of directors or the managing agent may obtain it on the HOA's behalf.
It must. The law requires coverage for the managing agent and the managing agent's employees.
Not sure if your association is covered? Hutsenpiller Insurance will review your current policies against Public Chapter 731 at no cost. We'll tell you if your limit meets the formula, whether your manager is covered, and what it takes to close any gap before January 1.
Hutsenpiller Insurance has served Middle Tennessee since 1992, with our headquarters being in Mt. Juliet, TN.