Tennessee Enacts Law to Protect Homeowners from HOA Fraud with Mandatory Fidelity Bonds
Tennessee has introduced a new law aimed at safeguarding homeowners from fraud within homeowners' associations (HOAs). Governor Bill Lee signed SB 2326, which mandates that HOAs maintain a blanket fidelity bond to insure against losses due to theft or dishonesty by directors, employees, or management companies. This legislation, effective January 1, 2027, requires coverage equal to the reserve balances of the association plus one-fourth of the annual assessment income. The bill, sponsored by Rep. Caleb Hemmer, was unanimously passed by both the Tennessee Senate and House. The move comes in response to increasing incidents of HOA fraud, including a notable case in Florida where $11 million was stolen from a community. Tennessee joins states like Virginia, California, and Florida in implementing such protective measures. 
