How to Dissolve an HOA in Tennessee: Vote, Filings, and Wind-Up

To dissolve an HOA in Tennessee, the association must secure a member vote at the threshold set by its CC&Rs (or the Tennessee Nonprofit Corporation Act default), adopt a plan of dissolution, file Articles of Dissolution with the Secretary of State, notify creditors, settle debts, obtain tax clearance, transfer common property, and then file Articles of Termination of Corporate Existence. The process runs through two separate state filings and can take months. Getting the order wrong can leave board members and homeowners personally exposed to lingering claims, so each step matters.

Find the Vote Threshold in Your Governing Documents

Every dissolution starts with the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and the bylaws. Look for a dissolution clause. Many CC&Rs require a supermajority of 67% to 80% or more of the total membership. If the governing documents set a number, that number controls.

If the CC&Rs and bylaws say nothing about dissolution, the Tennessee Nonprofit Corporation Act fills the gap. The default rule requires approval by two-thirds of the votes cast at the meeting, or by a majority of the total voting power, whichever is the smaller number.¹ The distinction matters. “Votes cast” only counts people who show up or submit a ballot; “total voting power” counts every homeowner whether they vote or not. In a low-turnout community, those two numbers can look very different.

Condominiums follow a different rule. Tennessee’s Uniform Condominium Act requires agreement from unit owners holding at least 80% of the association’s votes and 80% of first mortgage lenders before a condominium can be terminated.² That lender approval is built into the statute itself, which makes condominium dissolutions significantly harder.

Check Whether Mortgage Lenders Have a Vote

Even for non-condominium HOAs, look for a “mortgagee provisions” or “lender rights” section in the CC&Rs. Most professionally drafted declarations give mortgage lenders a vote on changes that could affect property values, and dissolution is almost always on that list. The declaration may require approval from a stated percentage of first-mortgage holders. Some include a deemed-approval clause treating a lender who receives written notice and fails to object within 30 days as having approved.

If your CC&Rs include lender consent requirements and you skip them, the dissolution can be challenged as invalid. Tracking down the current servicer for every mortgage in the community takes time. Start early, send requests by certified mail, and keep proof of delivery.

Draft the Plan of Dissolution

Tennessee law requires the notice of the dissolution vote to include a copy or summary of the plan of dissolution.¹ The plan comes before the vote, not after. It must identify who will receive the association’s assets once creditors are paid.

Start with a full inventory. Assets: bank balances, reserve funds, real property (pools, clubhouses, parks, private roads), equipment, unpaid assessments owed by homeowners. Liabilities: outstanding loans, vendor contracts, pending litigation, insurance obligations, other debts.

The plan should address common property in concrete terms. Options include:

Offering roads, drainage systems, or green spaces to the local city or county government. Municipalities are under no obligation to accept, and often require the infrastructure to meet current public standards first.
Deeding common areas to individual lot owners as tenants in common, or dividing specific parcels among adjacent property owners.
Selling the property to a third party and distributing proceeds to members after debts are paid.

Work these details out before the vote. Members are more likely to approve dissolution when they can see what happens to shared amenities and who pays to maintain them afterward.

Call the Meeting and Hold the Vote

Tennessee requires written notice to every member at least 10 days but no more than two months before a special meeting.³ The notice must state that the purpose is to consider dissolution and must include a copy or summary of the plan.¹ If your bylaws require longer notice, follow the bylaws. Missing either requirement gives opponents a straightforward basis to challenge the vote.

The vote can be conducted by in-person ballot, proxy, or written ballot, depending on what the bylaws allow. Document everything: attendance, proxies submitted, the exact count for and against, and the final tally. Keep signed ballots and proxies with the meeting minutes. These records are your proof that the dissolution was properly authorized.

File Articles of Dissolution with the Secretary of State

After the vote passes, the association files Articles of Dissolution with the Tennessee Secretary of State. The filing fee is $20.⁴ This filing does not end the HOA’s existence. It begins the winding-up period, when the association stops normal operations and focuses on settling its affairs: paying debts, collecting what it is owed, liquidating assets, and closing out contracts.

The board remains in charge during winding up, with authority to do what is reasonably necessary to close out business. The board should not take on new obligations or spend money on anything unrelated to the dissolution.

Notify Creditors and Pay Debts

This is the step most boards cut short, and it is the step most likely to create problems later. Tennessee provides a formal process for cutting off creditor claims, and following it protects both the board and any homeowners who receive distributions.

For known creditors, send written notice describing the dissolution and giving a deadline to submit claims. For unknown or contingent creditors, publish a notice once in a newspaper of general circulation in the county where the principal office is located. The notice must describe how to submit a claim and state that any claim not pursued within two years of publication will be barred.⁵

If a claim surfaces after assets are already distributed, the claimant can pursue the people who received distributions, up to the amount each person received.⁵ Publishing the newspaper notice and letting the claims window run is the way to avoid that outcome. Skip it and homeowners can be on the hook personally for old HOA debts years after they thought the matter was closed.

Pay all valid creditor claims from association funds first. Only after every known liability is resolved can the board distribute surplus funds or property to homeowners under the dissolution plan.

Get Tax Clearance

The Tennessee Department of Revenue must issue a tax clearance certificate before the Secretary of State will accept the final termination filing.⁶ To get it, file all final state tax returns and pay any outstanding tax liabilities. Mark each return as a “final return” where the filing system allows.⁷

On the federal side, the HOA files a final return with the IRS. Most HOAs file either Form 1120-H (as a homeowners association electing special tax treatment) or Form 990 (as a tax-exempt organization). The IRS states that exempt organizations should not file Form 966, the corporate dissolution form, and should instead follow the instructions for their applicable return type.⁸ Check the final-return box and report any income from the sale or distribution of assets during winding up.

Transfer Common Property and Close Accounts

Deeds transferring ownership of common areas must be properly executed and recorded with the register of deeds in the county where the property is located. If you are dedicating roads or utilities to a municipality, expect inspections and potentially required repairs before the transfer is accepted. If common areas are being divided among homeowners, each new deed must describe the parcel accurately and identify the grantee.

Close bank accounts, cancel insurance policies (only after the winding-up period is genuinely complete), and terminate remaining vendor contracts. Keep copies of financial records, meeting minutes, insurance policies, and governing documents. A common recommendation is to retain records for at least seven years, and to keep formation documents and meeting minutes permanently, since claims can surface for up to two years after the published dissolution notice.

File Articles of Termination

Once debts are paid, assets are distributed, tax clearance is in hand, and property transfers are recorded, file Articles of Termination of Corporate Existence with the Secretary of State. This filing costs another $20.⁴ The HOA’s legal existence ends when the Secretary of State files this document.⁹

Termination does not erase liability for anything that happened while the HOA was still operating. Claims that existed before termination can still be pursued against the dissolved corporation, its directors, officers, or members, unless those claims were properly barred through the creditor notification process.⁹ The two state filings total $40, but legal fees, property appraisals, deed preparation, recording fees, and newspaper publication push the real cost well beyond that.

Revoking the Dissolution Before It’s Final

If members have second thoughts, Tennessee allows the association to revoke its dissolution at any time before Articles of Termination are filed. Revocation requires the same level of authorization as the original dissolution. If members voted to dissolve, members must vote to revoke. The association files articles of revocation with the Secretary of State, and once filed, the revocation relates back to the original dissolution date as if it never happened.¹⁰

Once the Articles of Termination are filed, though, there is no mechanism to un-terminate. The only option is to form an entirely new association and re-record new covenants, which requires a fresh round of homeowner consent. That reality is worth raising with members during the initial vote.

What Homeowners Should Expect Afterward

After the HOA ceases to exist, every service it used to provide becomes an individual responsibility. If the association maintained private roads, each homeowner along that road shares in repaving and snow removal. If the HOA paid for landscaping in common areas, those areas either transfer to the municipality or become jointly owned parcels the neighbors must manage informally. Pools, clubhouses, and similar amenities that aren’t transferred to another entity may need to be decommissioned, which can involve additional permitting and expense.

The CC&Rs themselves may survive the dissolution of the corporate entity, depending on how the termination is drafted and recorded. Restrictive covenants often run with the land and don’t automatically disappear when the enforcing organization goes away. If you want the covenants extinguished entirely, the dissolution plan and termination documents need to say so explicitly, and the termination must be recorded in the county where the property is located.

1
Justia. Tennessee Code 48-64-102 – Dissolution by Board of Directors, Members and Third Persons
2
Justia. Tennessee Code 66-27-318 – Termination of Condominium
3
Justia. Tennessee Code 48-57-105 – Notice of Meeting
4
Tennessee Secretary of State. Business Forms and Fees
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Justia. Tennessee Code 48-64-108 – Unknown Claims Against Dissolved Corporation
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Tennessee Department of Revenue. F&E-15 – Inactive Business, Final Return, and Closing Your Account
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Tennessee Department of Revenue. GEN-5 – Closing a Business
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IRS. Form 966 – Corporate Dissolution or Liquidation
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Justia. Tennessee Code 48-64-101 – Dissolution by Incorporators or Directors
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Justia. Tennessee Code 48-64-105 – Revocation of Dissolution