Tennessee Security Deposit Laws
The complete guide to collecting, holding, and returning security deposits in Tennessee
Last updated • Based on TN Code § 66-28-301
📑 Table of Contents
Security Deposit Limits in Tennessee
Maximum amount landlords can collect
Under Tennessee law, the maximum security deposit landlords can collect is No statutory limit rent. Tennessee does not cap security deposit amounts. Landlords can set reasonable deposits.
- Standard Limit: No statutory limit
- Details: Tennessee does not cap security deposit amounts. Landlords can set reasonable deposits.
- Legal Reference: TN Code § 66-28-301
Before becoming a landlord or screening tenants, understanding deposit limits is essential for legal compliance. Overcharging can expose you to liability and tenant lawsuits.
While you’re allowed to charge up to No statutory limit, consider the local rental market. Setting deposits too high may deter qualified applicants, while setting them too low doesn’t adequately protect your investment. Most landlords find 1-1.5 months’ rent strikes the right balance.
🔍 Screen Tenants Before Collecting Deposits
The best protection isn’t a larger deposit—it’s finding responsible tenants. Our comprehensive screening includes credit, criminal, and eviction history.
Collecting Security Deposits
Best practices for move-in
When collecting security deposits in Tennessee, follow these best practices to protect yourself and comply with state law:
Move-In Documentation
Document the property’s condition thoroughly before the tenant moves in. This creates a baseline for comparison when evaluating damage at move-out.
📋 Move-In Checklist for Tennessee Landlords
- Complete a detailed move-in inspection with the tenant
- Take date-stamped photos of every room
- Note any existing damage or wear on inspection form
- Have tenant sign the inspection report
- Provide tenant with a copy of the inspection
- Document all appliance conditions and serial numbers
- Test smoke detectors and note results
- Record utility meter readings
- Provide written receipt for security deposit
- Store copies of all documents securely
Receipt Requirements
Provide tenants with written documentation of their security deposit payment, including the amount paid, date received, and where the funds will be held.
Under Tennessee law (TN Code § 66-28-301), landlords must:
- Accept payment via check, money order, or cashier’s check
- Provide written receipt upon request
- Include deposit amount in the lease agreement
- Follow any local ordinances that may impose additional requirements
Holding Requirements
How to properly store deposits
No requirement to pay interest on security deposits.
Tennessee does not require landlords to pay interest on security deposits. However, keeping deposits in a separate account is still recommended for accounting purposes.
Tennessee requires landlords to hold security deposits in a separate account. Do not commingle deposit funds with your personal or operating accounts.
Best Practices for Holding Deposits
- Keep deposits in a dedicated account separate from operating funds
- Maintain clear records of each tenant’s deposit amount
- Track any interest earned if required by law
- Never use deposit funds for personal expenses or property operations
- Keep documentation accessible for end-of-tenancy accounting
Allowable Deductions
What you can and cannot deduct
Tennessee landlords may deduct from security deposits for legitimate reasons, but cannot charge tenants for normal wear and tear. Understanding the difference is crucial to avoid disputes.
✅ Allowable Deductions
- Unpaid rent or late fees
- Damage beyond normal wear and tear
- Cleaning to restore unit to move-in condition
- Unpaid utility bills (if landlord-paid)
- Unreturned keys or access devices
- Damaged or missing appliances
- Unauthorized alterations
- Early termination fees (if in lease)
❌ Normal Wear and Tear (Cannot Deduct)
- Faded paint or wallpaper
- Worn carpet in high-traffic areas
- Small nail holes from pictures
- Minor scuffs on walls
- Worn finishes on floors
- Loose door handles or hinges
- Faded window treatments
- Minor plaster cracks
Calculating Depreciation
When deducting for damaged items, consider depreciation. You generally cannot charge full replacement cost for items that were already partially worn.
If carpet has a 10-year lifespan and was 6 years old when damaged:
- Replacement cost: $1,500
- Remaining useful life: 4 years (40%)
- Maximum deduction: $600 (40% × $1,500)
Charging the full $1,500 would be improper and could expose you to penalties.
Before making deductions, review our guide on verifying tenant income upfront—proper screening helps you find tenants who will maintain your property.
🛡️ Avoid Deposit Disputes with Better Screening
Most deposit disputes stem from renting to the wrong tenants. Comprehensive screening reveals fake references and fraudulent income before they become your problem.
Returning the Security Deposit
30 days deadline in Tennessee
Tennessee law requires landlords to return security deposits within 30 days after the tenant vacates. Landlord must return deposit within 30 days after tenant vacates (no sooner than 10 days).
Tenant Vacates Property
Conduct move-out inspection (with tenant if possible). Document all damage with photos and notes. The clock starts now.
Assess Damage & Get Quotes
Evaluate damage beyond normal wear and tear. Obtain repair estimates or invoices for any work needed.
Prepare Itemized Statement
Create detailed list of all deductions with costs and explanations. Include copies of receipts or estimates.
Return Deposit (Within 30 days)
Mail check for remaining balance plus itemized statement to tenant’s forwarding address. Send via certified mail for proof.
Missing the 30 days deadline can result in serious penalties, including forfeiting your right to make any deductions and potentially owing additional damages to the tenant.
Local City Rules
Some cities in Tennessee have additional requirements beyond state law. Check your local ordinances:
🏙️ Nashville
Check local housing ordinances
🏙️ Memphis
May have additional local requirements
🏙️ Knoxville
Check local tenant protections
Itemization Requirements
Documenting deductions properly
Written itemized statement required for any deductions.
What to Include in Your Itemization
A proper itemized statement should include:
- Description of each deduction: Clearly explain what the charge is for
- Cost or estimate: Amount deducted for each item
- Supporting documentation: Receipts, invoices, or contractor estimates
- Before/after photos: Visual evidence of damage
- Remaining balance: Amount being returned to tenant
| Deduction Item | Description | Cost |
|---|---|---|
| Wall Repair | Patch and paint 3 large holes in bedroom wall | $150 |
| Carpet Cleaning | Professional cleaning for pet stains (beyond normal) | $200 |
| Blind Replacement | Replace broken blinds in living room (2 windows) | $80 |
| Unpaid Rent | Final month prorated rent (5 days) | $250 |
| Total Deductions | $680 |
Penalties for Violations
Consequences of non-compliance
Wrongful withholding may result in liability for deposit amount.
⚠️ Potential Penalties in Tennessee
- Forfeiture: Missing deadlines may forfeit your right to make any deductions
- Damages: Wrongful withholding may result in liability for deposit amount.
- Attorney’s Fees: May be ordered to pay tenant’s legal costs
- Court Costs: Responsible for all litigation expenses
- Mark your calendar immediately when tenant gives notice
- Conduct thorough move-out inspection
- Document everything with photos and written notes
- Send itemization via certified mail for proof of delivery
- When in doubt, return the deposit and avoid litigation costs
Letter Templates
Ready-to-use forms for Tennessee landlords
📄 Full Security Deposit Return Letter
[Date]
[Tenant Name]
[Forwarding Address]
Dear [Tenant Name],
This letter confirms the return of your full security deposit for the property at [Property Address].
You vacated the premises on [Move-Out Date]. After conducting our move-out inspection, we found the property to be in satisfactory condition with no damage beyond normal wear and tear.
Enclosed please find a check in the amount of $[Amount], representing your full security deposit.
Thank you for being a responsible tenant. We wish you well in your new home.
Sincerely,
[Landlord Name]
[Contact Information]
📄 Partial Return with Itemized Deductions
[Date]
[Tenant Name]
[Forwarding Address]
Dear [Tenant Name],
This letter concerns the security deposit for [Property Address], which you vacated on [Move-Out Date].
Original Security Deposit: $[Amount]
Itemized Deductions:
1. [Description of damage/charge]: $[Amount]
2. [Description of damage/charge]: $[Amount]
3. [Description of damage/charge]: $[Amount]
Total Deductions: $[Total]
Amount Returned: $[Balance]
Enclosed please find a check for the balance owed, along with copies of receipts/estimates for the repairs. If you have questions about these deductions, please contact me.
Sincerely,
[Landlord Name]
[Contact Information]
📋 Need Tennessee Landlord Forms?
Access our complete library of free fillable landlord forms including move-in/out checklists, itemization forms, and notice templates.
Frequently Asked Questions
Tennessee security deposit FAQs
Tenant Screening Resources
Better screening = fewer deposit disputes
The best way to avoid security deposit issues is to find responsible tenants from the start. These guides help you screen effectively:
Screening Step-by-Step
Complete process
Best Practices
Industry standards
Eviction Prevention
Screen to avoid problems
First-Time Landlord
Beginner guide
Gig Economy Income
Uber, DoorDash, etc.
Self-Employed Income
Verification methods
No Rental History
First-time renters
Pet Screening
Evaluate pet applications
Fraud Prevention
Protect yourself from problem applicants
Related Legal Resources
TN Eviction Laws
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Deposit Rules & Tips
Best practices
Landlord-Tenant Laws
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Rent Increase Laws
State-by-state
Late Rent Laws
Grace periods & fees
Landlord Entry Laws
Notice requirements
Eviction Laws by State
All 50 states
Non-Payment Guide
What to do
Lease Breaks
Landlord rights
Abandoned Property
Legal process
Tax Deductions
Maximize write-offs
Become a Landlord
Complete guide
Raising Rent
Legal process
ESA Laws
Landlord obligations
All Landlord Forms
National library
🏠 Protect Your Investment with Better Screening
The best way to avoid security deposit disputes is to find responsible tenants from the start. Our comprehensive screening gives you credit, eviction history, criminal background, and more—so you can rent with confidence.
⚖️ Legal Disclaimer
This guide provides general information about Tennessee security deposit laws as of . Laws change, and local ordinances may impose additional requirements. This information is educational and should not be considered legal advice. For questions about your specific situation, consult with a licensed Tennessee attorney familiar with landlord-tenant law. Always verify current law before making legal decisions.
