7 Basics of Tennessee's Security Deposit Act

Landlords and tenants in Tennessee should understand their security deposit rights under the state’s landlord-tenant act. These rights include how much a landlord can collect, how the deposit must be stored, and if a walk-through inspection is required. Here are seven basics of security deposits in Tennessee.

7 Basics of Tennessee's Security Deposit Act

1. Security Deposit Limit - No Limit
2. Storing the Deposit - Separate Account. Does Not Have to Earn Interest
3. Written Notice - Yes. Written Notice to Tenant That Deposit is in Separate Account
4. Keeping Deposit - Damages, Unpaid Rent, Breaches of Lease
5. Walk-Through Inspection - Allowed
6. Returning Deposit - Within 60 Days
7. Selling Property - Transfer Deposits to New Owner

Is There a Security Deposit Limit?

No. In the state of Tennessee, there is no limit on the maximum amount a landlord can charge a tenant as a security deposit.

Storing the Security Deposit

In Tennessee, landlords must deposit a tenant’s security deposit in a separate account. This account must be in a bank or other financial institution that is subject to government regulations or Tennessee state regulations. The account does not have to earn interest.

If a landlord fails to store a tenant’s deposit in an account properly, the landlord cannot keep any portion of the tenant’s security deposit.

Is Written Notice Required After Receipt of the Security Deposit?

Yes. A landlord must notify the tenant in writing that the security deposit has been placed in a separate account. The landlord must include the location of the security deposit but does not have to provide the tenant with the account number.

Reasons You Can Keep a Tenant’s Security Deposit

In the state of Tennessee, a landlord can keep all or a portion of a tenant’s security deposit to cover:

• Unpaid rent
• Damage in excess of normal wear and tear
• Other breaches of the lease agreement

Is a Walk-Through Inspection Required?

Yes. In the state of Tennessee, a landlord must do a walk-through inspection to look for any damage to the property and must put together a written list of any damages. The tenant has the right to be present at this inspection. There are a few rules for this inspection.

1. The landlord must notify the tenant in writing of the tenant's right to be present at the walk-through inspection. This notification should be made when the landlord gives the tenant notice to vacate the unit or within five days of receiving a tenant’s written notice to vacate the unit.
2. The inspection must take place within four days of the tenant moving out of the unit.
3. The tenant can request a time for the inspection to take place during normal business hours, but the landlord will set the actual inspection time.
4. If the tenant sets an inspection time with the landlord but fails to show up for the inspection, the tenant loses the right to contest any damages the landlord lists in the inspection report. This condition must be clearly stated in the lease or rental agreement for it to be valid.
5. If the tenant does attend the inspection, both landlord and tenant must go through the property and put together a list of all damages to the property and the approximate cost of repair. The landlord and the tenant must sign this list. The tenant’s signature will serve as acceptance of the damages.
   1. If the tenant refuses to sign this list, they must put together a written list indicating the damages they do not agree with. The tenant can then pursue legal action for the items that they do not agree with.

Are All Tenants Allowed to Attend a Walk-Through Inspection?

No. Certain tenants have given up their right to attend a walk-through inspection. These include tenants who have:

• Abandoned the unit
• Vacated the unit without giving proper written notice
• Been removed from the unit by a court order
• Did not respond to the landlord’s request to inspect the unit
• Did not show up at the time they were supposed to inspect the unit with the landlord

If the tenant requests a copy of the inspection report, the landlord is still obligated to send the tenant this copy and must do so by certified mail.

Returning a Tenant’s Security Deposit

The landlord must send a notification to the last known address of the tenant. This should include the itemized list of damages and the amount of deposit owed to the tenant. If the tenant does not respond to this request within 60 days, the landlord can remove the deposit from the account. The tenant no longer has any right to it.

What Happens if You Sell Your Property?

If a Tennessee landlord sells the investment property, or the property otherwise changes hands, the landlord is required to transfer all security deposits to the new owner. The landlord must then notify the tenants in writing that the new owner is now in possession of their deposits.

Tennessee's Security Deposit Law

To read the law governing security deposits in the state of Tennessee, please refer to Tennessee Code Annotated § 66-28-301 and § 66-28-305.