More Than 40 Tennessee Tiny-Home Owners Sue Over ‘Zombie HOA’ They Say Developer Still Controls

More than 40 owners of tiny homes in three Tennessee communities are taking developer Claude “Chip” Hayes III to court, accusing him of running what they call a “zombie HOA.” They say Hayes kept control of their homeowners associations after residents should have taken over and mismanaged funds along the way.

The lawsuit seeks $5 million in damages, as well as control of HOA funds and records. The communities involved are the Retreat at Deer Lick Falls, the Retreat at Sunset Bluff and Water’s Edge. Hayes’s business model combined land sales, road construction and community amenities. Buyers could select from several tiny-home designs, live in the homes or rent them as holiday properties through a management service run by the developer.

Residents say the problems went beyond unfinished amenities. They raised concerns about HOA finances, building work and restrictions on which contractors they could use. The description of the lawsuit says almost 80% of one HOA’s budget went to a lawn-care company owned by Hayes, while promised amenities remained incomplete.

The governing documents gave Hayes control while the developments were being built. He was supposed to surrender that control five years after the first lot went to a non-developer or once 75% of the lots had been sold to non-developers, whichever came first. Deer Lick Falls residents argue that the handover should have happened in 2021. They allege Hayes added more property to the community and used the expansion to justify extending his control.

The first lawsuit began more than two years ago at Deer Lick Falls and was filed in 2024. Water’s Edge homeowners later joined, alleging that taxes on common areas went unpaid for more than two years and that the properties faced a possible tax sale. The conflict escalated again in 2026 at Sunset Bluff, after Hayes sought a temporary restraining order when he learned residents planned to meet and vote on the association’s control.