Tennessee homeowners sue developer over control of community HOAs

Homeowners in the Sunset Bluff community have filed legal action against developer Claude "Chip" Hayes III, claiming he continues to exercise control over their homeowners' associations despite no longer owning properties in the development. The residents allege that Hayes has systematically mismanaged association finances and directed disproportionate spending toward a lawn care company under his ownership.

According to the lawsuit, nearly 80 percent of one HOA's annual budget was allocated to Hayes's lawn care firm, raising questions about the propriety of such arrangements. The residents also contend that several amenities promised during the initial development of the community remain incomplete, with no clear timeline or accountability for their delivery.

The case highlights broader concerns about developer control of HOAs—a common issue in residential communities where original developers retain influence over governance even after selling properties. Legal experts refer to such situations as instances where developers exert prolonged control, sometimes referred to colloquially as "zombie HOAs" in property law circles.

The homeowners are seeking damages and demanding that Hayes relinquish control of the associations' operations and finances. The lawsuit underscores growing tensions between residents seeking independence in community governance and developers accused of using HOA mechanisms to extract ongoing financial benefits from properties they no longer own.