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Disclaimer: This article is for educational and informational purposes only. The contributor is not a licensed attorney, and this content does not constitute legal advice. No attorney-client relationship is formed by reading this post or contacting the contributor. All views expressed are personal and based on the contributor’s industry experience and legal education in progress.

Author: Jesus "Jesse" D. Gonzalez Jr. J.D. Candidate at Nashville School of Law

Originally Published: https://fieldtoforum.com/tennessee-agent-hoa-risk

FACTS

A young couple purchases their first home in a Nashville subdivision governed by a homeowners association (HOA). The buyer's REALTOR® never provides the HOA governing documents (Covenants, Codes, Restrictions, Rules, and Bylaws) before the inspection contingency expires and tells the buyers, “They’re usually not that strict, just standard stuff like keeping the yard clean.” Being first time home buyers, the young couple rely on that assurance and voluntarily satisfies their inspection contingency and accepts the home “as-is.” The couple has now waived their right to cancel the purchase agreement and proceeds to close excited about buying their first home.

Soon after moving in, they receive two violation notices from the HOA: one for installing a 6-foot privacy fence, standard in neighboring communities but prohibited under the HOA’s architectural guidelines, and another for parking the husband's licensed plumbing van on the street overnight. The HOA rules allow only “private passenger vehicles” to be parked outside the garage and prohibit any visible commercial signage.

Facing potential fines and threats of legal action, the couple discovers that these restrictions were clearly spelled out in the HOA's governing documents they never saw during the inspection period when negotiating their purchase using their licensed Tennessee Real Estate Agent and REALTOR®. They now face costly fence removal, limited ability to park at their own home, and no longer enjoy their property. The couple wants to know: can the real estate agent be held liable for failing to provide the HOA documents before the expiration of their inspection rights?

ISSUE

If a real estate agent fails to provide HOA documents before the buyer’s purchase inspection contingency cancels, expires, or is satisfied and the buyer later faces fines, fees, or restrictions they weren’t aware of, can the real estate agent be held legally liable?

RULES

T.C.A. § 66-5-206 – Tennessee Residential Property Disclosure Act

Require licensees (Licensed Tennessee real estate agents) to inform parties of their rights and obligations under the Act. A licensee is not liable if they comply with this duty, unless they commit intentional misrepresentation, fraud, or fail to disclose adverse facts of which they had actual knowledge or notice.

T.C.A. § 62-13-403 – Tennessee Real Estate Broker License Act: Requires real estate licensees to exercise reasonable skill and care, disclose adverse facts, and deal honestly and in good faith.

Tennessee Consumer Protection Act (TCPA):

Prohibits deceptive practices, including omissions or misrepresentations of material facts during real estate transactions.

Gray v. Boyle Inv. Co., 803 S.W.2d 678 (Tenn. Ct. App. 1990):

Held an agent liable for failing to disclose material facts, reinforcing the duty to communicate conditions affecting a buyer’s decision.

Stanfill v. Mountain, 301 S.W.3d 179 (Tenn. 2009):

Held that a REALTOR® could be liable under the TCPA for misrepresentations about property features and conditions.

Ledbetter v. Schacht, 395 S.W.3d 130 (Tenn. Ct. App. 2012):

Clarified that compliance with the Disclosure Act does not insulate licensees from liability under other statutes, including the Broker License Act.

TREC Rule 1260-02-.08 – Offers to Purchase:

Requires that all terms and conditions of the real estate transaction be included in the contract, a duty that extends to known HOA restrictions affecting use of the property.

TREC Rule 1260-02-.12(3)(f) – False or Misleading Statements:

Prohibits licensees from making misleading representations that could cause a buyer to act to their detriment.

NAR Code of Ethics – Article 1:

REALTOR® pledge to “protect and promote the interests of their client. This obligation to the client is primary.”

NAR Code of Ethics – Article 2:

REALTOR® must “avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction.”

NAR Code of Ethics – Article 9:

REALTOR® must ensure “that all agreements… are in writing… that clients receive copies of all signed documents,” and that they explain “the nature and content of documents” to their clients.

ANALYSIS

If a real estate agent fails to provide HOA documents before the buyer’s right to cancel expires, and the buyer later faces fines, fees, or restrictions they weren’t aware of, can the real estate agent be held legally liable?

T.C.A. § 66-5-206, Tennessee Residential Property Disclosure Act requires sellers to provide buyers with a disclosure form outlining known material defects. Real estate licensees are required to inform parties of their rights and obligations under the Act, but they are generally not liable for nondisclosures made by the seller unless the agent commits intentional misrepresentation, fraud, or fails to disclose adverse facts of which they had actual knowledge or notice.

While the Act shields agents from liability if they merely transmit information, it removes that protection if the licensee knows of adverse facts, defined in the statute as conditions that significantly affect the health, safety, or value of the property, and fails to disclose them.

In this case, the real estate agent failed to deliver the HOA documents before the buyer’s inspection contingency expired, despite knowing that the community was governed by restrictive covenants. The buyer, unaware of the HOA’s rules, proceeded to closing and was later fined for installing a standard fence and for parking a marked plumbing van on the street, both actions prohibited by the governing documents.

While the Act primarily focuses on physical defects, the definition of “adverse facts” is broad enough to include restrictive covenants that materially impact the buyer’s use and enjoyment of the property. The real estate agent was either aware of the HOA’s rules or had the means to obtain and deliver them during the buyer’s inspection contingency period. The failure to disclose these material restrictions, combined with verbal reassurances that minimized their importance, could constitute a failure to disclose adverse facts under the statute. If the buyer can prove that the agent had actual knowledge or constructive notice of the HOA limitations, liability under T.C.A. § 66-5-206 becomes a viable claim.

In addition to the Residential Property Disclosure Act, Tennessee law imposes an independent and affirmative duty on licensed real estate professionals to act with care, honesty, and diligence toward their clients. This duty is codified in the Tennessee Real Estate Broker License Act at T.C.A. § 62-13-403.

T.C.A. § 62-13-403 defines the core duties owed by Tennessee real estate licensees, including the obligation to exercise “reasonable skill and care,” “disclose to each party to the transaction any adverse facts of which the licensee has actual notice or knowledge,” and to “deal honestly and in good faith.” The statute's focus is not limited to physical defects; it encompasses any material facts that could affect a party’s decision in the transaction.

When a licensee knows or should know of an adverse fact that affects a party's decision and fails to disclose it, that failure may constitute a breach of statutory duty. The statute does not require intentional misconduct, mere negligence in failing to communicate adverse facts can trigger liability.

In the young couple’s scenario, the real estate agent knew that the property was subject to HOA restrictions but failed to provide the governing documents during the buyer’s purchase inspection period. The buyer was unaware of restrictions on fencing and street parking, both of which directly impacted on their intended use of the property. After closing, the buyer was cited and fined by the HOA for violating those rules. The real estate agent also made verbal statements downplaying the importance of the HOA’s enforcement practices, further influencing the buyer’s decision to proceed.

HOA rules that limit a buyer’s ability to use their property in customary ways, such as parking a licensed work vehicle or building a fence, constitute adverse facts. Because these rules were documented and accessible prior to closing, the real estate agent either had actual knowledge or was negligent in failing to acquire and disclose them. The buyer’s reliance on the real estate agent’s reassurances, coupled with the absence of timely documentation, strengthens the case for liability. This is not just a lapse in paperwork, it is a breach of the agent’s duty to act with reasonable care and disclose facts that materially affect the transaction.

Beyond fiduciary and statutory disclosure duties, Tennessee law also prohibits deceptive practices in consumer transactions through the Tennessee Consumer Protection Act (TCPA). When real estate agents mislead or withhold material information that influences a buyer’s decision, the TCPA provides an additional basis for liability.

Stanfill v. Mountain, 301 S.W.3d 179 (Tenn. 2009), the court found that a real estate agent who failed to ensure the accuracy of statements about the existence of an underground storage tank could be held liable under the TCPA. The agent’s omission was deemed a deceptive act because it misled the buyer and materially affected the transaction. The court emphasized that TCPA applies to real estate agents who engage in unfair or deceptive practices, even if the conduct is negligent rather than intentional.

The court ruled that under the TCPA, it is unlawful for any person to engage in unfair or deceptive acts or practices in the conduct of any trade or commerce (T.C.A. § 47-18-104). This includes misrepresentation or concealment of material facts, whether by action or omission, particularly when the consumer relies on that information to their detriment.

With our young couple, the real estate agent failed to provide HOA documentation during the buyer’s inspection period and verbally assured the buyer that the HOA rules were not strictly enforced. The buyer relied on that statement and closed on the home without knowing that the HOA prohibited street parking of commercial vehicles and required prior approval for fence construction. After closing, the buyer received violation notices and fines.

The real estate agents conduct, failing to provide critical governing documents and offering misleading reassurances, may qualify as a deceptive omission under the TCPA. The buyer relied on the agent’s statements and lack of warning in waving their contingency and proceeding to close. Once the restrictions were enforced, the buyer suffered a measurable loss. Under Stanfill, the agent need not have intended to deceive, negligent misstatements or omissions are enough. The failure to disclose material HOA restrictions, coupled with misleading verbal assurances, creates a strong basis for TCPA liability.

While statutory protections can offer real estate agents some insulation, Tennessee case law makes clear that those protections are not absolute. In Ledbetter v. Schacht, the Court of Appeals clarified that compliance with one disclosure statute does not excuse liability under another when an agent fails to disclose adverse material facts.

Ledbetter v. Schacht, 395 S.W.3d 130 (Tenn. Ct. App. 2012), The plaintiffs sued both the seller and the real estate licensee after discovering flooding issues on the property. The agent argued that they were not liable under the Tennessee Residential Property Disclosure Act because they had not made any affirmative misrepresentations. However, the plaintiffs alleged that the agent failed to disclose known issues and that this omission amounted to a breach of both the Disclosure Act and the Tennessee Real Estate Broker License Act.

The Court of Appeals held that compliance with the Disclosure Act does not shield a licensee from liability under the Broker License Act (T.C.A. § 62-13-403). That is, even if an agent properly delivers the seller’s disclosure form, they may still be liable if they independently fail to disclose adverse facts they knew or should have known about. The court underscored that statutory duties are cumulative, not exclusive.

Here, the agent did not misstate the presence of an HOA but failed to deliver the governing documents before the buyer’s inspection contingency expired. The buyer, unaware of key restrictions, proceeded to closing and was subsequently penalized by the HOA for parking violations and unauthorized fence construction. The agent had access to the HOA information but made no effort to verify or convey the specific rules impacting the buyer’s intended use.

Ledbetter makes it clear that real estate agents cannot hide behind procedural compliance with one statute if they violate duties imposed by another. Even if the real estate agent in this case had complied with the Residential Property Disclosure Act by delivering the seller’s disclosure (or advising the buyer of their inspection rights), that would not excuse the failure to disclose material facts governed by the Broker License Act. The agent’s inaction, combined with verbal assurances that downplayed the impact of the HOA, creates a cumulative breach of statutory duty, much like the one identified in Ledbetter. This decision strengthens the buyer’s position by confirming that multiple disclosure statutes may apply simultaneously, and that agents are not insulated from broader liability by checking just one legal box.

Tennessee courts have long recognized that real estate agents can be held liable for failing to communicate material facts that would impact a buyer’s decision. One of the earliest and clearest affirmations of this principle comes from Gray v. Boyle Inv. Co.

Gray v. Boyle Inv. Co., 803 S.W.2d 678 (Tenn. Ct. App. 1990), the buyers purchased property through a real estate brokerage without being informed that the property was subject to imminent foreclosure proceedings. The agent knew about the foreclosure but failed to disclose it to the buyers. After the sale, the buyers suffered financial harm as a direct result. The court held the agent liable for this nondisclosure.

The court ruled that real estate agents have a duty to disclose material facts known to them that would affect a reasonable person’s decision to proceed with a real estate transaction. The failure to disclose such facts, even without active misrepresentation, can constitute a breach of professional duty and result in liability for damages.

Remember, in our young couple’s example, the agent knew (or had reason to know) that the property was governed by an HOA with restrictive covenants impacting the buyer’s intended use. Despite this, the agent failed to provide the HOA’s governing documents before the buyer’s inspection contingency expired. The buyer later learned that the HOA prohibited both street parking of commercial vehicles and certain types of fencing, leading to fines and modification costs after closing.

Just as the agent in Gray withheld critical information that materially impacted the buyers' decision, so too did the agent in this case by failing to disclose the HOA restrictions in a timely manner. The fact that these restrictions resulted in fines and mandatory changes to the property makes them “material facts” by any standard. The agent's knowledge of the HOA, and failure to deliver or explain its rules, aligns closely with the conduct found actionable in Gray. This precedent reinforces the buyer’s argument that an agent cannot passively stand by when known property-affecting conditions exist; silence can be just as damaging, and just as actionable, as a false statement.

In addition to statutory duties and case law precedent, Tennessee real estate agents are also bound by the administrative rules of the Tennessee Real Estate Commission (TREC). These rules function as binding regulatory standards for licensees and carry disciplinary consequences for violations, even if no civil lawsuit is filed. Two TREC rules are relevant here.

TREC Rule 1260-02-.08 requires that “all offers to purchase real estate shall be in writing and contain all of the terms and conditions of the offer.” This rule is designed to ensure that the written agreement reflects all material conditions that could affect the parties’ rights or obligations. While the rule does not explicitly reference HOA restrictions, the requirement to include “all terms and conditions” can be interpreted to include known covenants or limitations that materially affect the use of the property.

In this case, the agent was aware that the property was located within a HOA-governed community. The HOA’s governing documents included specific restrictions on street parking and fence installation, both of which directly conflicted with the buyer’s intended use of the property. These restrictions were not disclosed in the contract nor provided to the buyer before the inspection contingency expired. Instead, the agent made a verbal assurance that enforcement was typically lax, which the buyer relied upon when proceeding to closing.

Because the HOA restrictions were known (or easily discoverable) at the time the offer was written, and because they directly impacted the buyer’s ability to use the property, they should have been disclosed as part of the “terms and conditions” of the sale. By omitting these known limitations from the written offer, and failing to provide the governing documents, the agent may have violated Rule 1260-02-.08. The buyer had no meaningful opportunity to negotiate or cancel based on those restrictions because they were excluded from the contract and not delivered during the due diligence window. While the rule is often enforced narrowly, its intent is to prevent material surprises post-closing, exactly the harm that occurred here.

TREC Rule 1260-02-.12(3)(f), Real estate licensees are prohibited from making any “false or misleading representation” that could cause a party to a real estate transaction to act to their detriment. This includes not only blatant falsehoods, but also omissions or vague assurances that leave clients with a materially incorrect understanding of vital facts.

In this case, the agent told the buyer that HOA rules were “usually not strictly enforced,” while simultaneously failing to provide the actual governing documents before the inspection period expired. The buyer relied on this assurance and closed on the property, only to later discover that the HOA enforced strict prohibitions against street parking of marked commercial vehicles and required pre-approval for fence installation. The buyer was fined and required to remove the improvements, financial harms they would have avoided had they known the rules before closing.

Even if the agent did not intend to deceive, the statement about lax enforcement created a misleading impression about the impact of the HOA’s restrictions. That impression led the buyer to waive further investigation and move forward with the purchase. TREC Rule 1260-02-.12(3)(f) is clear that licensees must not mislead clients in a way that causes financial or transactional harm. In this case, the combination of failure to disclose and minimizing verbal assurance may well meet the threshold for a rule violation, regardless of whether the agent acted with malice. The buyer acted to their detriment based on the agent’s misleading statements, bringing this conduct squarely within the reach of the rule.

While statutory duties and TREC rules govern legal compliance, real estate agents who are members of the National Association of REALTORS® are also bound by the National Association of Realtors® (NAR) Code of Ethics, a nationally recognized standard of professionalism. Though the Code does not carry the force of law, violations may lead to disciplinary action by local REALTOR® associations and are often cited as persuasive guidance in litigation or license complaints. Several articles of the Code directly relate to the agent’s failure to deliver HOA documents and provide accurate information to the buyer.

NAR Code of Ethics – Article 1, States that REALTORS® “pledge themselves to protect and promote the interests of their client. This obligation to the client is primary.” While not absolute, this duty requires more than passivity, it demands active advocacy, transparency, and professional diligence in furthering the client’s interests.

The buyer in this case relied on their REALTOR’S® guidance in evaluating the home and neighborhood. The REALTOR® failed to deliver the HOA documents before the inspection period expired and gave verbal assurances minimizing the importance of the HOA rules. As a result, the buyer purchased the property without knowing key restrictions that would materially affect their enjoyment and use, leading to fines and modification costs.

Failing to provide governing documents that directly impact how a buyer may use the property, especially when those documents are accessible and relevant, runs counter to the agent’s ethical obligation to “protect and promote” the client’s interests. Article 1 demands more than just facilitating the sale; it requires ensuring that the client’s decision is informed and free from foreseeable pitfalls. The REALTOR’S® silence, and misplaced reassurance, allowed the buyer to close on a property that was misaligned with their goals, violating this core professional standard.

NAR Code of Ethics – Article 2, provides that REALTORS® “shall avoid exaggeration, misrepresentation, or concealment of pertinent facts relating to the property or the transaction.” This standard applies not only to active falsehoods but also to omissions or casual downplaying of material facts.

Rather than provide the HOA documentation, the REALTOR® told the buyer the rules were “usually not that strict,” implying that enforcement was unlikely or minimal. In fact, the HOA actively enforced its restrictions, and the buyer was cited for both street parking of a commercial vehicle and unauthorized fence construction shortly after moving in.

The agent’s statement was not merely incomplete; it was affirmatively misleading. By assuring the buyer that enforcement was not a concern, the REALTOR® gave the impression that the HOA’s restrictions were either trivial or negotiable. That misrepresentation, combined with the failure to disclose the governing documents, directly led to the buyer’s loss. Under Article 2, the REALTOR’s® conduct falls squarely within the definition of concealment and misrepresentation of pertinent facts.

NAR Code of Ethics – Article 9, requires REALTORS® to “ensure that all agreements… are in writing,” and that clients receive copies of all signed documents. Additionally, REALTORS® must “explain the nature and content of documents” to their clients in clear terms.

The HOA’s governing documents were never delivered or explained to the buyer before the expiration of the inspection contingency or before closing. Despite their relevance to the buyer’s intended use of the property, no written summary or documentation was provided, nor was there any discussion of what the rules permitted or prohibited.

Article 9 places a proactive burden on REALTORS® not only to hand over documents but to explain their content and implications. Here, the REALTOR® failed to provide or review critical materials that governed the buyer’s post-closing rights. That failure deprived the buyer of informed consent and stands in direct conflict with the professional duties outlined in Article 9.

CONCLUSION

Tennessee law imposes a layered framework of duties on real estate professionals, statutory, regulatory, and ethical. While no single rule or case currently creates strict liability for failing to deliver HOA documents before a buyer’s inspection contingency expires, the cumulative effect of these duties makes clear: Tennessee real estate agents who fail to provide critical HOA information, and who downplay its importance, risk legal exposure.

In this case, the agent failed at multiple levels. Despite knowing that the property was governed by restrictive covenants, the agent neither delivered the HOA documents during the due diligence period nor ensured the buyer understood their significance. Instead, vague assurances and a lack of documentation left the buyer exposed to financial penalties and lifestyle restrictions, outcomes that were both foreseeable and preventable.

Whether under the Tennessee Real Estate Broker License Act, the TCPA, the TREC rules, or the NAR Code of Ethics, real estate professionals are not just facilitators of sales, they are fiduciaries, advisors, and gatekeepers of material information. When agents cut corners, dismiss details, or substitute convenience for candor, the buyers suffer, and liability follows.

The question is not whether the agent handed over a form. The question is whether they upheld their duty to protect their client’s interests and disclose material facts. In this case, the answer appears to be no, and Tennessee law may well hold them accountable for it.