How to become a landlord in Tennessee

Tennessee's four largest rental metros span a wide range of economics, from Memphis's $1,151 average multifamily rent to Nashville metro asking rents of $1,820. Landlords can earn recurring rent income, while Tennessee's market spread lets you choose among different price points and vacancy risks. How do Tennessee's rents, vacancy, taxes, and regulation compare with your other options?

None of the four metros require a statewide rental license to get started. New owners can apply the wrong rules when they fail to check the county: 17 Tennessee counties operate under a detailed landlord-tenant statute while the other 78 follow older, looser rules, and Nashville adds a registration mandate under state law.

What it means to become a landlord in Tennessee

Becoming a landlord in Tennessee means taking on overlapping legal and business obligations. Legally, you must follow whichever body of landlord-tenant law your county applies, deliver the disclosures state and federal law require, and handle deposits and evictions through prescribed procedures. On the business side, you carry a mortgage, property taxes, maintenance reserves, insurance, and possibly franchise and excise taxes if you hold the property in an LLC. You also screen applicants, collect rent, coordinate repairs, and respond to maintenance calls, either yourself or through a manager who typically takes 8 to 12% of monthly rent.

The single most important variable is location. Whether your property sits in one of the 17 counties covered by the Uniform Residential Landlord and Tenant Act (URLTA) determines your deposit-handling rules, late fee caps, eviction notice periods, and repair obligations. Confirm your county's status before you sign a lease template, because a form drafted for Davidson County may cite statutes that don't apply in Putnam County.

Business setup: LLC formation, licensing, and tax registration

Tennessee has no statewide rental license for long-term residential landlords. The Tennessee Department of Revenue states directly that income from long-term residential leases is not subject to business tax, so a landlord renting a single-family home on annual leases owes no state business license or business tax registration for that activity.

Tennessee taxes short-term rentals differently. Tennessee imposes business tax when you rent vacation lodging for 180 consecutive days or less, and owners register as Classification 3 taxpayers in the county and city where the property sits. Gross receipts between $3,000 and $100,000 per jurisdiction require a $15 minimal activity license from the county or municipal clerk; receipts of $100,000 or more require a standard business license and an annual return. Tennessee generally imposes 7% state sales tax plus 1.50% to 2.75% local sales tax on taxable accommodations, but sales tax does not apply when the same person occupies the accommodation for 90 continuous days or more. As of July 1, 2025, the first 30 days of any STR stay are subject to local occupancy tax. If you're weighing the STR route, Tennessee's rental laws for short-term rentals add city permit layers on top of these taxes.

An LLC is optional, and its value depends on your liability exposure versus its carrying cost. Tennessee LLC formation costs $50 per member with a $300 minimum and $3,000 maximum, filed on Form SS-4270 with the Secretary of State. Expect these ongoing obligations:

• File an annual report of at least $300 by the first day of the fourth month after your fiscal year closes (April 1 for calendar-year filers), and maintain a registered agent with a physical Tennessee street address; a P.O. Box alone doesn't qualify.
• File and pay franchise tax of 0.25% of Tennessee net worth (minimum $100) and excise tax of 6.5% of Tennessee taxable income on Form FAE170.

Many family-owned rental LLCs escape franchise and excise tax through the FONCE exemption (Family Owned Non-Corporate Entity). Qualifying requires at least 95% family ownership and substantially all (66.67%) of the entity's activity in passive investment income, with residential rents counting only up to four residential units at any one location. Eligible LLCs claim the exemption annually on Form FAE 183, due the 15th day of the fourth month after the tax year closes. An investor holding one or two single-family rentals in a family LLC often pays only the $300 annual report; an investor with a five-unit building at one address loses FONCE eligibility and owes franchise and excise tax on top of it.

City and county landlord registration requirements

Nashville is the only Tennessee city authorized to operate a landlord registration under T.C.A. § 66-28-107; Springfield also maintains a separate municipal rental-registration program. The statute authorizes registration only in counties with metropolitan government and population over 500,000. Bills to extend that authority to other cities failed in the General Assembly in both 2024 and 2025, so Memphis, Knoxville, and Chattanooga landlords with long-term tenants face no general registration requirement today.

If you own even one rental unit in Davidson County, you must register with the Metro Department of Codes Administration. Metro codified the controlling ordinance BL2023-1839 at Metro Code § 16.33.170; some guides frequently misidentify it as BL2022-1471, a separate ordinance passed the same day that only amends dwelling-unit definitions. The mechanics:

• A single $10 annual fee covers all units you own in Davidson County.
• Register online at the ePermits portal or mail the Landlord Registration Application to the Property Standards Division, P.O. Box 196350, Nashville, TN 37219-6350.
• The form requires the rental address, unit type, owner name, phone, physical home address (no P.O. Box), and email, with optional co-owner and property manager fields.
• Failing to register, or failing to report an ownership change within 30 days, triggers a fine of $50 per week per dwelling unit until you comply. Metro must send certified-mail notice at least 15 days before any penalty hearing.

Other registration regimes exist. Springfield, Tennessee requires all residential rental owners to register each unit under its municipal rental code, with a three-year, non-transferable certificate. And most major cities require permits for short-term rentals specifically: Memphis charges $300 initially ($150 renewal), Knoxville $70 to $120 depending on type, Chattanooga $250 for homestay permits and $500 for absentee operators, and unincorporated Hamilton County $750 for the application plus first year. Those STR permits are separate from, and in addition to, the state tax registrations above.

Tennessee landlord-tenant law: URLTA and where it applies

URLTA applies only in counties with populations over 75,000 according to the 2010 federal census, under T.C.A. § 66-28-102. Public Chapter 182, effective July 1, 2021, permanently froze that benchmark at the 2010 census by deleting the statute's reference to subsequent censuses, so a county that grows past 75,000 today still never comes under the Act. Putnam County illustrates the point: its 2020 population of 79,854 exceeds the threshold, but because it was below 75,000 in 2010, URLTA does not apply there.

The Legal Aid Society of Middle Tennessee and West Tennessee Legal Services confirm these 17 covered counties: Anderson, Blount, Bradley, Davidson, Hamilton, Knox, Madison, Maury, Montgomery, Rutherford, Sevier, Shelby, Sullivan, Sumner, Washington, Williamson, and Wilson. Some property management sites list 18 or 19 counties including Greene or Putnam; those lists conflict with the statutory text and the General Assembly's own bill record.

Inside URLTA counties, the Act governs security deposit handling, a 10% late fee cap, required lease disclosures, entry rules, habitability duties, tenant repair remedies, and eviction notice periods. Outside them, general property law controls: no statutory deposit deadline, no late fee cap, and eviction notices under T.C.A. § 66-7-109 instead. A full walkthrough of Tennessee landlord-tenant laws covers both regimes in more depth. One rule applies statewide regardless of county: under Crawford v. Buckner (Tenn. 1992), a lease clause limiting a residential landlord's liability for negligence is void as against public policy.

How to draft a legally compliant Tennessee lease agreement

A Tennessee lease agreement in a URLTA county must carry several written disclosures at or before the tenancy begins:

• The name and address of the agent authorized to manage the premises, plus an owner or agent for service of process, plus a phone number, email, or portal for maintenance requests (T.C.A. § 66-28-302). Skip this and you become the agent for service of process yourself.
• The location of the bank account holding the security deposit (T.C.A. § 66-28-301); the statute does not require the account number.
• A written statement that the landlord is not responsible for and will not provide fire or casualty insurance for the tenant's personal property (T.C.A. § 66-28-201(a)).
• If you want the right to show the unit to prospective tenants during the final 30 days of the lease, the lease must say so, and you must give at least 24 hours' notice before entering (T.C.A. § 66-28-403(e)(5)).

The entry-notice rule under T.C.A. § 66-28-403 is more flexible than many landlords expect in URLTA counties. For most ordinary entries, including inspections and repairs, the statute sets no fixed advance-notice period; the tenant may not unreasonably withhold consent. The same rule generally applies to showings. The entry-notice rule does tighten in two specific situations, however: a genuine emergency requires no notice at all, while showing the unit to prospective tenants during the final 30 days of the lease requires both a lease clause granting you that right and at least 24 hours' notice before you enter. Whatever the circumstances, keep in mind that you may not abuse the right of access or use it to harass the tenant.

Federal law adds the lead-based paint disclosure for any housing built before 1978. Provide the EPA pamphlet "Protect Your Family from Lead in Your Home" and disclose known lead hazards and available reports. You must also include a signed Lead Warning Statement in the lease. Keep signed disclosures for 3 years. Noncompliance can bring triple damages in a civil suit and civil penalties up to $11,000 per violation.

On rent terms, URLTA counties impose two hard limits. Rent carries a five-day grace period that begins on the due date itself, and landlords cannot charge a late fee until it passes; if the fifth day falls on a Sunday or legal holiday, payment on the next business day avoids the fee. Late fees are capped at 10% of the rent past due, and a Tennessee Court of Appeals decision applied that as 10% of the monthly rent, not compounded on accumulated fees. Neither party may waive the grace period, though a lease agreement may include a waiver clause, in 12-point bold font or larger, letting you file for eviction immediately after the grace period without the standard 14-day notice.

Occupancy limits belong in the lease agreement too, but set them carefully. Nashville's codes require each bedroom to have at least 70 square feet for one occupant plus 50 square feet per additional occupant, with a cap of 4 unrelated persons in units of three or fewer bedrooms and 5 in larger units. HUD's Keating Memo treats two persons per bedroom as generally reasonable, but using occupancy caps to screen out families with children violates the Fair Housing Act's familial status protections.

Security deposit rules in Tennessee

T.C.A. § 66-28-301 governs deposits in the 17 URLTA counties, and its central requirement is structural: every deposit must sit in an account used only for security deposits, at a bank or lending institution that state or federal regulators oversee. If you fail to use a compliant separate account, or fail to provide the required damage listing, you forfeit the right to retain any portion of the deposit at all.

Landlords and tenants must follow a move-out inspection process. The inspection must occur on the day the tenant vacates or within 4 calendar days afterward, and if the tenant requests a mutual inspection, both parties compile and sign a listing of damage and estimated repair costs. Pair this with a documented move-in inspection at the start of the tenancy: photographing and listing the unit's condition when the tenant takes possession gives you the baseline the move-out listing is measured against. You may recover later-discovered damage only if you find it before the earlier of 30 days after the tenant vacated or 7 days after a new tenant takes possession. If the tenant leaves owing rent, you may apply the deposit to the debt. If a refund is due, send notice to the tenant's last known address; if you hear nothing for 60 days, you may keep the deposit free of any claim.

Some plain-language guides, including FindLaw, describe a 30-day deposit-return deadline. The statutory text does not contain an express standalone 30-day return rule; it addresses the 60-day unclaimed-refund process and the 30-day damage-discovery window instead. Check the current official Tennessee General Assembly codification before relying on either reading, since the practical difference affects when you must cut the refund check. Outside URLTA counties, no fixed statutory deadline exists and common-law principles govern.

How to screen tenants and comply with Fair Housing

Written, uniformly applied tenant screening criteria are your protection. The federal Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status, and disability, and HUD's February 2021 memorandum extends the sex provisions to sexual orientation and gender identity. The Tennessee Human Rights Act mirrors the federal list and adds creed; it does not add age or LGBT status at the state level, and T.C.A. § 7-51-1802 blocks Tennessee cities from expanding protected classes for private landlords beyond the state list.

Within those boundaries, your tenant screening can include a background and credit check. You may also verify income and apply a reasonable minimum income threshold, which the Tennessee Human Rights Commission confirms is lawful if you apply it uniformly to every applicant. Federal screening guardrails deserve attention:

• HUD says landlords cannot justify a blanket ban on anyone with any arrest or criminal conviction because it creates disparate impact by race and national origin. Evaluate convictions individually for recency and relevance.
• HUD advises considering less common income sources, such as SSDI and Housing Choice Vouchers, when assessing ability to pay. In Tennessee, many Housing Choice Vouchers flow through the Tennessee Housing Development Agency (THDA) and local public housing authorities, so that's the starting point for understanding where these programs originate in the state. If voucher tenants interest you, here's how to become a Section 8 landlord.

You may not exclude service animals or other assistance animals, and you may not charge a fee or deposit for them. Write your criteria down before you list the property: minimum income multiple, credit threshold, conviction lookback policy, and required documentation. Then apply the same list, in the same order, to every applicant.

Habitability standards and property maintenance

In URLTA counties, T.C.A. § 66-28-304 sets four affirmative duties: comply with building and housing codes materially affecting health and safety, make all repairs needed to keep the premises fit and habitable, keep common areas clean and safe, and provide waste receptacles in complexes of four or more units. You and the tenant may agree in writing that the tenant performs specified repairs, but only in good faith and never to dodge your own obligations.

Tenants may pursue real remedies when a landlord fails to meet these duties. For failure to supply essential services such as gas and heat, T.C.A. § 66-28-502 gives a tenant who has given written notice a repair-and-deduct remedy: procure the service and deduct the actual, reasonable cost from rent. Electricity also qualifies. The tenant may instead stay in place and recover damages for the diminished rental value. The tenant may also move to reasonable substitute housing, stop paying rent for the noncompliance period, and recover the substitute-housing cost plus attorney's fees. For general noncompliance, § 66-28-501 allows damages and injunctive relief after 14 days' written notice. It also permits attorney's fees.

The Legal Aid Society of Middle Tennessee warns tenants never to stop paying rent over a repair dispute, and that cuts both ways: expect tenants who know the statute to follow the notice-and-remedy path rather than withholding, and respond to written repair notices promptly. A working knowledge of what tenant rights Tennessee law grants will keep you ahead of those disputes.

Non-URLTA counties lack these statutory remedy procedures, and enforcement runs through local building inspectors and county health departments instead. Common-law negligence liability still applies statewide: under Holloway v. GP (Tenn. Ct. App. 2017), a landlord with notice of a defective condition is liable for failing to act with the forethought of a prudent person.

What landlord insurance covers in Tennessee

A standard homeowners' policy generally does not cover a property once you convert it to a full-time rental, because homeowners' forms are written for owner-occupied properties. Confirm the occupancy terms with your insurer before a tenant moves in. Insurers cover rentals under dwelling fire policies ranging from DP1 through DP3:

• Form | Perils covered | Typical loss settlement
• DP1 | Fire and lightning as a base, with internal explosion also included; windstorm, hail, vandalism, and others by add-on | Actual cash value
• DP2 | DP1 perils plus vandalism, burglar damage, falling objects, weight of ice and snow, and accidental discharge or overflow of water | Replacement cost
• DP3 | Open peril on the dwelling: everything except listed exclusions such as flood and earthquake | The insurer pays replacement cost if the policy includes it or an endorsement adds it; confirm the policy form

All three forms include Coverage D, fair rental value, which pays the rent you lose while a covered loss makes the unit unfit, generally capped at 20% of the dwelling limit. On DP1, those payments reduce your dwelling limit; on DP2 and DP3 they don't. Standard dwelling forms require you to add liability by endorsement, so confirm your policy includes it.

Two exclusions matter most for landlords: vandalism coverage disappears once a dwelling sits vacant more than 60 consecutive days before a loss, and ordinary wear and tear never qualifies as vandalism. A tenant's accidental bathtub overflow is a covered water loss on DP2 or DP3; scuffed floors and pet damage from hard living are not.

Steadily writes DP1, DP2, and DP3 Tennessee landlord insurance statewide, from Nashville duplexes to Sevier County short-term cabins, and covers property types many carriers decline, including vacant and fix-and-flip properties. Policies pair building coverage with liability options from $100K to $1M+ and loss of rental income up to 12 months of fair rental value. A property with $300K in dwelling coverage typically runs $900 to $1.8K per year against a national average of about $1,478. Get a quote in minutes at quote.steadily.com. No phone call required.

How to set rent and budget expenses

Price against your specific metro, because Tennessee's four largest markets are moving in different directions. MMG Real Estate Advisors reports the following Q2 2026 figures:

• Metro | Average rent | YoY rent change | Occupancy
• Nashville | $1,586 | -2.8% | 92.3%
• Memphis | $1,151 | +0.1% | 86.2%
• Knoxville | $1,454 | -1.7% | 93.3%
• Chattanooga | Not reported | -0.3% | 92.2%

Sources: MMG Real Estate Advisors Q2 2026 reports for Nashville, Memphis, Knoxville, and Chattanooga.

Nashville is a concession market right now: Apartment List reported in July 2026 that 47% of Nashville apartments were offering one or more free months of rent, and metro rent trends are negative across most sources. Memphis carries the highest vacancy risk, with Apartments.com/CoStar putting Q2 2026 multifamily vacancy at 15.1%, second highest nationally. Chattanooga has the tightest supply-demand balance of the four, absorbing 1,236 units over the trailing four quarters against only 377 completions, while Knoxville is the only metro where completions (1,609) outran absorption (1,378).

Budget from the expense side before you commit to a rent number. Beyond the mortgage, plan for property taxes, insurance, maintenance reserves, and a vacancy allowance; Tennessee's statewide rental vacancy rate ran 8.7% in 2025 per Census Bureau data, so pricing a unit assuming zero vacant weeks overstates your income. If you hire management, add 8 to 12% of collected rent plus placement fees, covered below. HUD's FY2026 Fair Market Rents offer a useful floor check for working-class submarkets: in Memphis, for example, $1,274 for a two-bedroom and $1,683 for a three-bedroom.

The Tennessee eviction process: notices, timelines, and court filing

Every Tennessee eviction runs through court. In URLTA counties, T.C.A. § 66-28-511 flatly prohibits landlords from recovering possession by any means outside the court process. The ban includes shutting off electricity or gas. Cutting the water also violates the statute, and non-URLTA counties reach the same result through the forcible entry and detainer statutes.

The price of self-help is steep: § 66-28-504 gives a locked-out tenant actual damages and attorney's fees. A court may also award punitive damages when appropriate. In West v. Akard (2022), the Court of Appeals let a $3,000 compensatory award support $12,000 in punitive damages. Only the sheriff may physically remove a tenant.

The lawful path starts with the correct notice. In URLTA counties:

• Ground | Notice | Cure right
• Nonpayment or remediable breach | 14 days | Yes, tenant may pay or cure
• Same breach repeated within 6 months | At least 7 days | No
• Non-remediable breach | At least 14 days | No
• Violence, real and present danger, hazardous conditions | 3 days from receipt | No
• Month-to-month termination, no fault | At least 30 days before the periodic rental date | N/A

In non-URLTA counties, T.C.A. § 66-7-109 requires 14 days' notice for nonpayment or damage beyond ordinary wear, 30 days for other lease defaults, and 3 days for specified violent, dangerous, or drug-related conduct.

Once the notice period lapses without compliance, file a detainer warrant in General Sessions Court. The court must serve the tenant with the summons at least 6 days before the court date, and a tenant who fails to appear takes a default judgment. After judgment, no writ of possession can issue for 10 days, the same window in which the tenant may appeal to Circuit Court; in nonpayment cases, appealing requires the tenant to post a bond equal to one year's rent. When the writ issues, the sheriff posts at least 24 hours' written notice on the door and may execute only between 8:00 a.m. and 5:00 p.m.

Managing your rental: self-management vs. a property manager

Tennessee property managers charge 8 to 9% of monthly rent statewide on average, with 8 to 12% typical across Nashville, Memphis, Knoxville, Chattanooga, and Clarksville, per TurboTenant's July 2026 fee survey. That monthly fee usually covers rent collection, tenant communication, maintenance coordination, inspections, and financial reporting. Managers bill tenant placement separately, and it's substantial: 75% of one month's rent statewide, up to a full month's rent in Nashville. Add lease renewal fees (around $190 statewide, $200 to $500 in Nashville and Chattanooga), maintenance markups of 10 to 25% on vendor invoices in most markets, and eviction management fees of $300 to $1,000 plus court costs.

On a $1,500 rental, full management costs roughly $1,440 to $2,160 per year before placement and renewal fees. When you manage the property yourself, you keep that money but must track every obligation in this guide: the 5-day grace period math, the 14-day notices, the 4-day inspection window at move-out, the maintenance phone at 2 a.m. Self-management fits owners who live near the property, hold one or a few units, and have time to learn the statutes. A manager earns the fee when you invest out of state, scale past a handful of doors, or buy into a market like Memphis, where practitioner reports of maintenance markups reaching 40 to 60% at some firms make contract diligence worth as much as the headline percentage.

FAQ

These answers summarize Tennessee's main registration, lease, deposit, screening, eviction, entity, and insurance requirements.

Do I have to register as a landlord anywhere in Tennessee?

Only in Nashville/Davidson County (a $10 annual registration covering all your units, with a $50 per week per unit fine for noncompliance) and Springfield, which registers rental units on three-year certificates. Memphis, Knoxville, and Chattanooga require permits for short-term rentals only, not long-term leases.

Which counties fall under URLTA?

Seventeen: Anderson, Blount, Bradley, Davidson, Hamilton, Knox, Madison, Maury, Montgomery, Rutherford, Sevier, Shelby, Sullivan, Sumner, Washington, Williamson, and Wilson. The list is frozen at the 2010 census, so growing counties like Putnam won't be added without new legislation.

What disclosures must my lease include?

In URLTA counties: the managing agent's identity and contact information, the location of the deposit account, and a statement that you won't insure the tenant's personal property. Any pre-1978 property also requires the federal lead-based paint disclosure packet, and a showing-access clause is needed if you want to show the unit during the lease's final 30 days.

How do I handle a security deposit?

Hold it in a bank account used only for deposits and tell the tenant where it's held at signing. Inspect within 4 calendar days of move-out, document damage in an itemized listing, and remember that skipping the separate account or the damage list forfeits your right to keep any of it.

Can I set my own screening criteria?

Yes, within Fair Housing limits. Uniform minimum-income and credit standards are lawful; blanket criminal-record bans, fees for assistance animals, and occupancy rules that squeeze out families with children are not.

What are the basic eviction steps?

Serve the correct written notice for your county and ground (14 days for nonpayment in URLTA counties), file a detainer warrant in General Sessions Court after it expires, wait out the 10-day post-judgment stay, and let the sheriff execute the writ. Changing locks or cutting utilities exposes you to actual damages and attorney's fees. Courts may also award punitive damages.

Do I need an LLC to be a landlord in Tennessee?

An LLC separates the property's liabilities from your personal assets, but it costs at least $300 to form, $300 per year in annual reports, and franchise and excise tax unless your entity qualifies for the FONCE exemption (95% family ownership, mostly passive income, and no more than four residential units at one location).

What kind of insurance do I need for a rental?

A dwelling fire policy in one of the DP1 to DP3 forms rather than homeowners' insurance, ideally with liability added and loss-of-rent coverage included. DP3 covers the widest range of perils; a $300K dwelling typically costs $900 to $1.8K per year.