Tennessee Security Deposit Laws in 2025

Updated December 2025

I'll be straight with you—security deposits cause more fights between landlords and tenants than almost anything else in the rental world. Someone always feels like they got screwed, and usually it's because neither side really understood the rules going in.

I've spent the last few years helping Tennessee landlords manage their properties through Hemlane, and you know what I've learned? Most security deposit disasters are totally preventable. People just don't know what Tennessee law actually says, so they wing it and end up in small claims court arguing over $600.

Let's fix that. This is what you actually need to know about how security deposits work in Tennessee, written by someone who deals with this stuff every single day.

What's a Security Deposit Really For?

Think of it like this, you are borrowing someone's house. They want insurance that you'll actually pay rent and not destroy the place. So you hand them a chunk of money upfront—usually around what you'd pay for one month of rent—and they hold onto it while you live there.

But here's the thing most people miss: that money isn't theirs to spend. According to Tennessee Code § 66-28-301, landlords have to put it in a separate bank account, can't touch it, and have to give it back (with interest!) if you didn't mess anything up.

The law's been around since the '70s but it has been updated over the years to give tenants more protection. Good landlords don't care because they were already doing the right thing. Bad landlords? Well, the penalties got a lot worse for them.

Can Landlords Charge Whatever They Want?

Sort of. Tennessee doesn't have a legal cap on security deposits like some states do. I know that sounds scary, but in practice, most landlords charge pretty reasonable amounts because they're competing for good tenants.

What you'll usually see:

• One month's rent as the basic security deposit
• Maybe another half-month's rent if you have pets (service animals don't count—they're protected under federal Fair Housing rules)
• Sometimes a one-time "non-refundable" fee, though that's sketchy and needs to be spelled out clearly

According to stuff I've read from the Tennessee Bar Association, there's technically nothing stopping a landlord from asking for three months' rent as a deposit. But realistically? Nobody is going rent from you if you do that. You would be shooting yourself in the foot.

If a landlord is asking for something that feels excessive, push back. Get it in writing. Make them explain it. A desperate landlord will negotiate. A shady one won't—and that's your red flag to walk away.

Where Does Your Money Actually Go?

Okay, this is important. Your landlord cannot just dump your deposit into their regular checking account and use it to buy groceries. State law says they have to:

1. Put it in a dedicated account at a real bank
2. Use that account ONLY for security deposits
3. Tell you in writing where the account is (not the account number, just which bank)

And yeah, your money's supposed to earn interest while it sits there:

• If you signed your lease between 2003-2007: 4% per year
• Between 2007-2012: 3% per year
• After 2012: 1.5% per year

That interest belongs to you, not the landlord. When you get your deposit back, they have to include the interest unless they're keeping some of it for legitimate reasons.

Here's a weird detail hardly anyone knows: if your interest adds up to more than $50 in a year, you can actually request they pay it to you annually instead of waiting until you move out. Never seen anyone do this, but it's technically in the law.

The Move-Out Drama: How This Usually Goes Wrong

Moving out is where everything falls apart. The law spells out a pretty specific process but almost nobody follows it correctly.

What You're Supposed to Do

Give your landlord your new address in writing. Email works if your lease allows it, but honestly? I would send it certified mail just so there is proof. Because your landlord's deadlines do not start until they have your address and you do not want them claiming they never got it.

The Walk-Through Inspection Thing

This is the part that trips everyone up. Tennessee law says landlords are supposed to offer you a chance to be there when they inspect the place after you move out. Here is how it's supposed to go, according to § 66-28-301(b):

The landlord notifies you within 5 days that you can be at the inspection. The inspection happens either on the day you hand over keys or within 4 days after. You both walk through, make a list of any damage with estimated costs, and both sign it. If you disagree with something, you write it down right then and there.

Sounds great, right?

Reality check: tons of landlords skip this. They just inspect after you're gone and send you a bill. Technically that's allowed if you didn't request the inspection or if you requested it and then didn't show up. But if you DID request it and showed up and they still refused? That's a problem for them legally.

My advice? Always request the walk-through in writing. Show up even if it's inconvenient. Document everything with your phone. Because once that inspection's done, your ability to dispute charges gets way harder.

The Return Timeline (AKA When Do I Get My Money Back?)

Here's where the law gets fuzzy and lawyers argue. Some sources say 10 days. Others say 30. The current statute doesn't actually specify an exact deadline—it just says landlords have to return your deposit or send you an itemized deduction list in a "reasonable" time.

An older version of the law from 2010 explicitly said 10 business days, but that language got changed in later amendments. So what's "reasonable"? Nobody really knows for sure.

When I'm working with landlords through Hemlane, I tell them to aim for 10-14 days max. Any longer and you're asking for problems. Yeah, you might technically have more time, but why risk it? Tenants get anxious about their money, and rightfully so.

The deduction list needs to be detailed. Not just "cleaning - $200" but "Deep cleaned carpets to remove pet stains, $200, invoice attached." Specifics matter.

What Can Actually Come Out of Your Deposit?

Not whatever the landlord feels like. The law's pretty clear about what's allowed under § 66-28-301(b):

They CAN charge you for:

• Rent you didn't pay
• Damage beyond normal aging and use
• Cleaning costs if you left the place dirty
• Money they lost because you broke the lease

They CAN'T charge you for:

• Normal wear and tear from living there
• Stuff that was already broken when you moved in
• Routine maintenance they should be doing anyway
• Upgrades or improvements

Seems simple, but that phrase "normal wear and tear" starts arguments constantly.

The Great Debate: What's Normal vs. What's Damage?

This is where 95% of deposit fights happen. Let me give you real examples from stuff I've actually seen:

The question I always ask: would this issue exist even if someone lived there carefully and normally for that amount of time? If yes, it's wear and tear. If it happened because someone was careless or destructive, that's damage.

A 5-year-old carpet is gonna look worn. That's expected. A 5-year-old carpet with Kool-Aid stains covering half of it? That's on you.

What Happens When Landlords Mess Up

Tennessee law actually has real teeth here. According to Tenn. Code Ann. § 66-28-301(c) and (d), if a landlord:

• Doesn't keep your deposit in that separate account, OR
• Doesn't give you that itemized damage list

Then they lose the right to keep ANY of your money. Period. They have to give back the whole deposit.

And beyond that? You can sue them. If you win, the court might award:

• The full deposit amount
• Sometimes double what they kept
• Your court costs
• Your attorney fees if you hired one

That last part's huge. It means you might be able to find a lawyer who'll take your case without money upfront, since they can get paid from the judgment.

But here's the catch: you can only sue over things you disputed in writing during the move-out process. If you signed that damage list without objecting, you can't suddenly change your mind later and say everything on it was wrong.

How to Actually Protect Yourself (Real Advice That Works)

For Tenants

Take a video on Day 1. Not photos—video. Walk through every room with your phone and narrate what you see:

"Okay, we're in the bathroom now... you can see this crack in the corner of the sink... these scratches on the floor by the toilet... this stain on the grout line..."

Email it to your landlord that same day. Then do the EXACT same thing when you move out. This is your insurance policy against bogus charges.

Clean like crazy before you leave. I'm talking deep clean. Inside the oven. Behind the fridge. Under the bathroom sink. Baseboards. Windows.

Hiring professional cleaners for $100-150 is way smarter than losing $500 of your deposit because the landlord says the place was dirty. Get a receipt showing you hired cleaners—that's evidence.

Show up for the walk-through. I know it's annoying. I know you're busy moving. Go anyway. Dispute things right then and there, in writing, on that form. Once you leave, your power to fight charges drops dramatically.

Everything in writing, always. Texts count. Emails count. Verbal conversations? Useless. When you give your forwarding address, do it in writing. When you request the inspection, do it in writing. When you disagree with charges, do it in writing.

For Landlords

Use software that tracks this stuff automatically. I'm obviously biased because I work with Hemlane, but seriously—trying to manage security deposits in a spreadsheet is asking for mistakes. You need something that:

• Keeps separate accounting for each tenant
• Calculates the interest correctly based on when their lease started
• Reminds you of deadlines
• Stores all the photos and inspection notes in one place

We built Hemlane specifically because landlords kept screwing this up and ending up in court over preventable mistakes.

Set reminders the second someone gives notice. Don't trust your memory. The day they say they're moving out, set calendar alerts for:

• Day 5: Send them the inspection notice
• Move-out day: Schedule inspection within 4 days
• Day 10: Itemized list sent if you're keeping anything
• Day 14: Deposit check in the mail

Miss these deadlines and you might lose the right to keep legitimate deductions.

Document EVERYTHING with photos. Take photos when they move in. Take photos when they move out. Close-ups of damage. Wide shots showing the room. Date-stamped photos stored with the lease file.

I've seen landlords lose in court because they couldn't prove the damage existed. Judge asked "do you have photos?" and they said "no, but I remember it was damaged." That doesn't fly.

Be detailed with your deduction list. Don't write "cleaning - $300." Write:

"Kitchen and bathroom deep cleaning required. Grease buildup on stove and inside oven. Soap scum on shower walls. Hair and debris in bathroom drains. Professional cleaning service, $300. Invoice from ABC Cleaning attached."

See the difference? One's vague and feels made-up. The other's specific with backup documentation.

Weird Situations That Come Up

What if they just disappear without telling you?

If the tenant abandoned the place (stopped paying, moved out, won't respond to you), you can still inspect and make deductions. You're supposed to send the itemized list via certified mail to their last known address.

If 60 days go by and they still haven't contacted you about any remaining refund, you can keep it without worrying about them suing you later. That's in § 66-28-301(f). But you have to actually try to reach them first.

What if you sell the property while someone's still renting?

The deposit goes with the property. You transfer all the tenant deposits to the new owner, notify the tenants in writing about who their new landlord is, and you're done. The new owner becomes responsible for returning those deposits eventually.

Make sure your property sale contract spells this out clearly. I've seen sellers and buyers fight about who was supposed to handle deposits because nobody documented the transfer.

Can tenants use their deposit as last month's rent?

Not unless your lease specifically says they can. The deposit isn't prepaid rent—it's protection for damage and unpaid bills AFTER they move out.

Most leases explicitly say you can't do this, and for good reason. If someone uses their deposit as rent and then trashes the place during move-out, the landlord's got nothing.

Does Your Location Matter?

Tennessee's security deposit law technically only applies to counties with populations over 68,000 (based on the most recent census). So places like:

• Nashville (Davidson County)
• Memphis (Shelby County)
• Knoxville (Knox County)
• Chattanooga (Hamilton County)
• Pretty much anywhere people actually live

Smaller rural counties might not be covered by this statute, which means you'd fall back on general common law rules instead. That's less protective for tenants, honestly.

Also, some cities have their own additional housing rules. Nashville's got local codes through the Metro Clerk's Office. Memphis has its own stuff. If you're in a big city, check for local ordinances beyond state law.

When Should You Actually Get a Lawyer?

Most of the time? You don't need one. Small claims court was invented for exactly these types of disputes. You can file without a lawyer for anything under $25,000, and the process is pretty straightforward.

But you might want legal help if:

• The amount's big (over $2,000)
• The landlord obviously broke the law but won't budge
• You're a landlord getting sued and you don't have documentation
• The tenant's asking for double damages and attorney fees

For tenants who can't afford a lawyer, try:

• Legal Aid Society if you're low-income
• Tennessee Bar Association referral service for free consultations
• Local tenant advocacy groups in Nashville, Memphis, or Knoxville

Why We Built Hemlane for This

Look, full transparency: I work for Hemlane. So obviously I think what we built solves real problems.

But here's why it actually matters for Tennessee security deposits. We kept seeing the same mistakes over and over:

• Landlords mixing security deposits with their personal money
• Nobody tracking the interest calculations correctly
• Missed deadlines because someone forgot to check their calendar
• No documentation of the property's condition
• Disputes happening because nobody could prove what was discussed

So we built software that handles all of it:

Separate accounting - Every tenant's deposit tracked individually with automatic interest calculations based on their lease start date

Automated reminders - The system alerts you when inspections are due, when deduction lists need to be sent, when deposits need to be returned

Digital inspections - Built-in checklists with photo uploads. Everything's timestamped and stored with the lease documents

Paper trail - All communication between landlord and tenant logged and searchable

Compliance - The system follows Tennessee's legal requirements so you don't have to memorize the statute

We work with landlords who have one rental property and landlords with 50+ units across the state. Most of them came to us after either losing a security deposit dispute or almost losing one because their documentation was a mess.

For DIY landlords who don't want to pay 10% of their rent to a property manager but also don't want to manage everything in a notebook, Hemlane's kind of the sweet spot.

The Real Bottom Line

Security deposits don't have to be this complicated. Tennessee's law is actually pretty reasonable—it protects tenants from shady landlords while giving legitimate landlords a way to get paid for actual damage.

The problem is almost nobody reads the law, so they just make stuff up as they go along. Then they're surprised when they end up in court.

What actually works:

1. Document everything from day one - Photos, videos, written communication
2. Follow the actual process - Request inspections, sign forms, meet deadlines
3. Keep things separate - That separate account requirement isn't a suggestion
4. Communicate clearly - No surprises, no assumptions, everything in writing
5. Be fair and reasonable - Tenants should clean thoroughly. Landlords shouldn't nickel-and-dime.

When both sides follow what Tennessee Code § 66-28-301 actually says, deposits come back without drama, nobody wastes time in court, and everyone moves on.

Most security deposit fights happen because someone didn't follow the process or didn't document things properly. Fix those two things and you'll avoid 90% of problems.

Quick Answers to Common Questions

How much can my landlord charge for a security deposit?

Tennessee doesn't cap it, but most charge around one month's rent. Pet deposits are commonly another half-month's rent. If someone's asking for way more than that, question it. Service animals can't be charged pet deposits under federal law.

When do I get my deposit back?

The law doesn't give an exact timeline anymore (older versions said 10 business days). Most landlords return it within 10-14 days. If you haven't heard anything after 3 weeks, start asking questions.

Can they keep my deposit for normal wear and tear?

Nope. Faded paint, worn carpet from walking, minor scuffs—that's all normal aging. They can only deduct for damage beyond what you'd expect from someone living there normally.

What if my landlord doesn't return my deposit at all?

If they don't return it or don't send an itemized list within a reasonable time, they lose the right to keep ANY of it. You can sue in small claims court for the full amount, possibly double, plus your court costs and attorney fees.

Do I have to attend the move-out inspection?

No, but you should. If you request it and then don't show up, you lose your ability to dispute the damage list later. Being there lets you challenge things immediately.

Can I use my security deposit to pay last month's rent?

Not unless your lease explicitly says you can. The deposit serves a different legal purpose—it covers damage and unpaid bills AFTER you move out.

What if I disagree with the damage charges?

Dispute them in writing during or right after the move-out inspection. If you sign the damage list without noting disagreements, you'll have a much harder time fighting it later. Document your side with photos and detailed explanations.

Does my deposit earn interest?

Yeah. For leases signed after July 2012, it's 1.5% per year. The landlord has to pay you that interest when they return your deposit (unless they're keeping some for legitimate deductions). If the interest adds up to $50+ in a year, you can actually request annual payments.

What if the landlord sells the property?

Your deposit transfers to the new owner. The old landlord should notify you in writing about who your new landlord is. The new owner becomes responsible for eventually returning your deposit when you move out.

Legal Disclaimer: This is educational info, not legal advice. Tennessee law changes, and your specific situation might be different. For actual legal guidance, check Tennessee Code Annotated or talk to a qualified attorney.

When you're not sure about something, document it and communicate in writing. Most disputes happen because someone didn't follow the process, not because the law itself is confusing.

Sources:

• Tennessee Code § 66-28-301 - Security Deposits
• Tennessee Bar Association - Landlord-Tenant Analysis
• HUD Fair Housing Act
• Legal Aid Society of Middle Tennessee
• Tennessee Bar Association