Most landlords in the state of Tennessee require tenants to pay a security deposit. Security deposits can help protect landlords from financial damages due to negligent tenant actions. Examples of negligent tenant actions include nonpayment of rent and certain lease violations.

That said, whereas you have a right to ask for a security deposit from a tenant, you are bound by law to abide by Tennessee landlord tenant law. The collection and return of security deposits are primarily regulated by TN Code Ann. § 66-28-301. 

The code provides a set of rules that must be followed to protect tenants and landlords. The following is a basic overview of the Tennessee Security Deposit laws. 

How Much Can a Landlord Charge for a Security Deposit in Tennessee? 

There’s no limit to how much you can ask your tenant for a security deposit in Tennessee. However, we suggest keeping the security deposit reasonable. Otherwise, you might have trouble finding a tenant for your rental property. 

Be aware that counties with a population of less than 75,000 might be exempt from the provisions of the TN Landlord Tenant Act. Before levying a security deposit on a tenant, check your local county or city ordinances first. 

Can Landlords Charge More for Pet Deposits Under Tennessee Law? 

Yes! You can ask for an additional deposit from tenants with pets. However, it’s important to exempt tenants who use service dogs from paying an additional deposit. 

A tenant holds a service animal by their red and black harness, as per tennessee renters rights.

As per the Americans with Disabilities Act (ADA), a service animal is a dog that has been rigorously trained to perform a specific job. 

Furthermore, ‘disability’ is a protected class under the Tennessee Fair Housing Act. The act requires that landlords treat tenants fairly and equally regardless of their disability status. 

As a landlord, you have a right to request the tenant whose disability isn’t readily apparent to submit proper documentation for your review. You’d also be within your landlord rights to hold the tenant liable for any damages their service dog causes to your unit. 

How Do Tennessee Landlords Need to Store Security Deposits? 

As a landlord in Tennessee, you need to store your tenant’s security deposit in a separate banking account. The account must be in a financial institution that is subject to Tennessee state regulations. The account doesn’t have to be interest-bearing. 

If you don’t store your tenant’s deposit as is necessary, you risk forfeiting any right to withhold any portion of the deposit after a tenant moves out. 

Do Landlords Have to Provide a Written Notice After Receiving a Security Deposit? 

Yes! Written notice is a requirement in the state of Tennessee. Once you receive your tenant’s security deposit, you need to notify your tenant in writing. The written notice needs to state the amount received, when you received it and where you’re storing it. 

What Can a Tennessee Landlord Withhold From a Tenant’s Security Deposit? 

As a Tennessee landlord, you have a right to make the following deductions from a tenant’s security deposit:

  • Unpaid rent. You can use all or a portion of the tenant’s deposit to cater for any unpaid rent after a tenant moves out. 
  • Violations of the lease agreement that lead to financial losses. An example of this would be unpaid utility bills or illegal property alterations. 
  • Damages exceeding normal wear and tear. This might include holes in the wall or broken appliances from improper use.

The glass window pane of a rental property is shattered, resulting in a tenant's loss of their security deposit.

Landlords are not liable for damages exceeding normal wear and tear. Examples of unexpected damages include missing tiles, missing door handles or smashed windows. If a tenant moves out of your property without fixing these, you have a right to make appropriate deductions from their security deposit. 

Do Tennessee Landlords Need to Do Walk-Through Inspections? 

Yes. You need to do a walk-through inspection to see if a tenant has caused damage to the unit. The tenant has a right to be present during the inspection exercise. For a walk-through inspection, you need to abide by the following rules: 

  • Notify your tenant of their right to be present during the inspection exercise. Notify them when giving the tenant a notice to vacate the unit or 5 days after receipt of your tenant’s request to leave. 
  • Carry out the walk-through inspection within 4 days of the tenant vacating the unit. 

While you have a right to schedule when the inspection will take place, your tenant has a right to request the inspection be done during normal business hours. The tenant loses a right to contest any damages listed on the inspection report if they fail to show up during the agreed upon inspection time. 

If the tenant shows up for the inspection, both parties must go through the property and document any damages. Next, both of you must append your signatures to the list of damages. 

A landlord in a green sweater holds an itemized list of damages for a tenant to sign, as per tennessee rental laws.

If the tenant refuses to sign the itemized list of damages, they need to write down the damages they disagree with and, if they want to, seek legal redress. 

When do Landlords Return a Tenant Security Deposit in Tennessee? 

Typically, you have 30 days to return a tenant’s security deposit in Tennessee. If you’re making deductions, you need to send an itemized list of deductions to the tenant’s last known address. 

The tenant then has 60 days to request a security deposit refund. If they don’t, the deposit is yours to keep. 

In a Nutshell: Tennessee Security Deposit Law

Do you still have questions about TN security deposit law? If you do, Keyrenter Knoxville can help. We’re an experienced property management company in Knoxville, Tennessee. We help property owners maximize their rental income and simplify the management of their investment properties. 

Get in touch with us today to learn more about our services and schedule a free on-site consultation. You can reach us by email at [email protected] or by dialing (865) 999-4539. We look forward to hearing from you!


Disclaimer: This blog should not be used as a substitute for legal advice from a licensed attorney in your state. Laws change, and this post might not be updated at the time of your reading. Please contact us for any questions you have in regards to this content or any other aspect of your property management needs.