Overview
Tennessee’s security deposit laws are designed to protect the interests of both landlords and tenants by regulating how deposits are collected, held, and returned. Clear rules help minimize disputes and ensure accountability.
Under Tennessee Code Annotated § 66-28-301 to § 66-28-304, landlords must follow specific procedures when managing security deposits. Failure to comply may result in forfeiture of the right to retain any portion of the deposit.
This guide covers:
How much landlords can charge
Where deposits must be stored
Rules for returning security deposits
Penalties for non-compliance
Related Statute: Tenn. Code Ann. § 66-28-301 to § 66-28-304
1. Security Deposit Limits & Storage Requirements
Maximum deposit: Tennessee law does not set a limit on the amount a landlord may charge for a security deposit.
Storage requirements: Security deposits must be held in a separate account used exclusively for holding tenant deposits. This account must be maintained in a financial institution regulated by the state or federal government.
Tenant notification: Landlords must inform tenants of the name and location of the financial institution where the deposit is being held.
Law Reference: Tenn. Code Ann. § 66-28-301
2. Security Deposit Returns & Allowable Deductions
Return deadline: The deposit must be returned within 30 days after the termination of the lease and the tenant vacating the premises.
Permissible deductions: Deductions may be made for unpaid rent, damages beyond normal wear and tear, and any charges specified in the lease.
What landlords cannot deduct: Landlords may not deduct for normal wear and tear such as faded paint or minor scuffs.
Itemized statement required: If deductions are made, landlords must provide a written itemized list of damages and associated costs.
Law Reference: Tenn. Code Ann. § 66-28-301(b)-(c)
3. Interest Payments & Documentation Requirements
Interest payments: Tennessee law does not require landlords to pay interest on security deposits.
Move-in condition report: A move-in inspection must be conducted with the tenant, and both parties should sign a checklist detailing the unit’s condition.
Tenant review period: The tenant has the right to inspect the premises alongside the landlord during move-out to verify the final condition.
Failure to provide documentation: If the landlord fails to conduct a move-out inspection or provide an itemized list of deductions, they may forfeit the right to withhold any part of the deposit.
Law Reference: Tenn. Code Ann. § 66-28-301(c)-(d)
4. Penalties for Mishandling Security Deposits
Tennessee imposes consequences on landlords who fail to comply with deposit handling rules.
Failure to return the deposit or provide a written statement within 30 days can result in the landlord forfeiting the right to retain any portion of the deposit.
Failure to conduct required inspections may lead to similar penalties.
Law Reference: Tenn. Code Ann. § 66-28-301
Key Takeaways
There is no limit on the amount that can be charged as a security deposit.
Deposits must be kept in a separate account and disclosed to the tenant.
Deposits must be returned within 30 days with a written itemization if deductions are made.
A move-in and move-out inspection is required, and failure to follow procedures may forfeit a landlord’s right to withhold funds.
No interest is required to be paid on security deposits.
By understanding and following Tennessee security deposit laws, landlords can remain compliant, and tenants can ensure fair handling and return of their funds.
Disclaimer: This blog post is intended for informational purposes only and does not constitute legal advice. Readers should not act or refrain from acting based on any information included in this post without seeking legal counsel or other professional guidance specific to their situation. The information is provided “as is” without any representations or warranties of any kind, express or implied, including but not limited to the accuracy, completeness, or reliability of the content. Laws and regulations may change and vary by jurisdiction.
