Tennessee landlords who understand their state’s security deposit laws avoid common issues like deposit disputes, missed return deadlines, and unclear expectations with tenants.
In this guide, you’ll learn everything you need to know regarding these regulations, including maximum amounts landlords can request, how to store deposits, whether interest applies, legal reasons to deduct, returning deposits, handling disputes, and more.
Statutes Regulating Tennessee Security Deposits
Tennessee’s security deposit laws are set out in Section 66-28-301 of the Tennessee Code Annotated, which explains how landlords must collect, store, and return residential security deposits.
Maximum Security Deposit Amounts Under Tennessee Law
Tennessee does not cap how much landlords can charge for a security deposit, and they can set an amount that fits the needs of their property. This flexibility stays the same regardless of the lease type, contract length, or any other rental details.
Tennessee does not offer any exceptions to these rules, and no city or county in the state enforces its own limits that override state law.
Security Deposit Storage Regulations
Tennessee law requires landlords who operate more than one rental unit to keep every security deposit in a separate account reserved only for tenant funds. Landlords must also notify tenants in writing about where they are holding the deposit.
For example, a landlord cannot comingle funds by placing a tenant’s deposit in a personal or general business account.
Security Deposit Interest in Tennessee
Tennessee security deposit law does not require landlords to place deposits in interest-bearing accounts. Landlords only need to keep each deposit in a separate account that they use exclusively for security deposits, and have no legal obligation to generate or pay interest to their tenants.
Making Security Deposit Deductions
Strong security deposit practices protect the long-term health of rental properties. Tenants sometimes fall short of rent or fees and leave damage that goes far beyond normal wear and tear. As such, landlords need access to funds to settle balances or make repairs that return the unit to its pre-turnover condition.
When Landlords Can Deduct
Tennessee landlords may draw from a tenant’s security deposit for the following reasons:
- Repairs for damage beyond normal wear and tear
- Unpaid rent that the tenant leaves hasn’t paid by move-out
- Deep or specialized cleaning needed to restore a safe, livable environment
- Replacement of keys, access devices, or other required items not returned
- Costs listed in the lease that relate directly to tenant-caused issues
When Landlords Can’t Deduct
Tennessee landlords may not draw from a tenant’s security deposit for the following reasons:
- Routine cleaning that reflects expected use during a standard tenancy
- Minor cosmetic scuffs or wear that do not count as actual damage
- Property upgrades or improvements unrelated to restoring the unit
- Problems that arise from delayed or insufficient landlord maintenance
- Damage or conditions caused by the tenant or their guests
Necessary Documentation to Accompany Deductions
Tennessee landlords must provide tenants with an itemized list of deductions, along with receipts, invoices, or other proof of repair costs. State law requires this documentation any time a landlord keep parts of a deposit, so landlords should maintain clear records that show exactly why they made each deduction.
What to Do When Deductions are Greater Than the Deposit
Sometimes a tenant defaults on rent or leaves behind damage that goes far beyond the security deposit. When this happens, Tennessee landlords can bill the tenant for the remaining balance and request immediate repayment.
If the tenant refuses to pay, landlords can send the matter to a collection agency or pursue the outstanding amount in their local Tennessee small claims court.
Returning Security Deposits to Tenants
Tennessee law lays out specific rules for returning any remaining portion of a tenant’s security deposit after a landlord makes eligible deductions. Landlords in counties that follow the Uniform Residential Landlord and Tenant Act (URLTA) need to follow these steps to stay compliant and avoid disputes.
Required Timeline for Return
Landlords must inspect the unit within 5 days after the tenant moves out and create an itemized list of deductions during that inspection. They then need to send that list by Certified Mail to the tenant’s last known address.
When a tenant provides a forwarding address, the landlord must return the remaining deposit within 30 days after the tenancy ends. If a tenant does not respond to the certified mailing within 10 days, landlords may keep the deposit, but only for legitimate deductions allowed under Tennessee law.
Method for Return
Landlords may return the deposit by check or any other verifiable payment method. When withholding part of the deposit, Tennessee landlords must include an itemized list of deductions from the move-out inspection.
Penalties for Late Return
Tennessee law imposes strict consequences when landlords fail to follow the inspection process, to send an itemized list, or to return the deposit within the required 30-day window. If a landlord skips these steps, they lose the right to keep any portion of the deposit. A court may also order them to return the full amount and pay additional costs if the tenant takes legal action.
Security Deposit Disputes
When tenants in Tennessee disagree with how a landlord handles their security deposit, they may dispute the deductions. Disputes often begin with a written request for explanation, followed by a formal demand if the tenant believes the landlord’s charges are illegitimate. If the the tenant can’t resolve the disput on their own, they can pursue mediation or file a claim in court.
Landlords in Tennessee can reduce the risk of security deposit disputes by maintaining detailed move-in and move-out condition reports, keeping accurate accounting records, and outlining deposit terms future lease agreements. Careful documentation, close attention to Tennessee laws, and attention to timelines can also help smooth out the process.
Using Condition Reports to Document Damage
When handling security deposits in Tennessee, protect your rentals by documenting each unit’s condition at move-in and move-out. By using digital condition reports, you can create detailed before-and-after media and back up deductions when damage to your property occurs.
To make this process easier, use property management software to create digital reports with photos and videos directly from your phone. Solid documentation that records the rental’s condition at move-in and again at move-out will make your deductions cleaner and far less debatable.
Sign up for a free TurboTenant account to collect security deposits, document property damage, and organize all essential details in one secure platform.
FAQs: Tennessee Security Deposit Law
Can a landlord deduct painting from a security deposit in Tennessee?
A Tennessee landlord can deduct painting costs only when a tenant leaves damage that goes beyond normal wear and tear. Routine repainting that comes with turnover usually does not qualify, but excessive marks, stains, or wall damage can justify using a portion of the deposit.
Are nail holes considered normal wear and tear in Tennessee?
Small nail holes from light picture hanging generally count as normal wear and tear in Tennessee, so landlords usually cannot deduct for them. Larger holes, wall anchors, or repeated damage that requires patching or repainting may qualify as tenant-caused damage and allow for a deduction.
Does the landlord or tenant have to pay for carpet cleaning in Tennessee?
In Tennessee, a landlord may charge for carpet cleaning only if the tenant leaves the carpet excessively dirty or damaged beyond normal wear and tear. Ordinary cleaning associated with turnover is typically a landlord’s responsibility and not a valid security-deposit deduction.
What happens if a landlord doesn’t return a security deposit within 30 days in Tennessee?
If a Tennessee landlord fails to return the security deposit or provide an itemized list of deductions within 30 days after the tenant vacates, the landlord may forfeit the right to keep any portion of the deposit and must return the full amount.
