Your success as a landlord in Tennessee depends on knowing and complying with dozens of laws (primarily state) that affect your property management business. For example, if you violate state security deposit laws, you face a potential tenant lawsuit in small claims court. Or you may end up in court for failing to maintain your rental property or illegally discriminating in your choice of tenants. The bottom line is that too many landlords end up spending a great deal of time and money (attorney fees and court costs, or, in some situations, extra damages for especially outrageous behavior)—that could have been saved by following the law.
Here are some tips on avoiding some of the key legal problems facing landlords in Tennessee.
Before you advertise a vacant apartment, it is crucial that you understand fair housing laws and what you can say and do when selecting tenants. This includes how you advertise a rental, the questions you ask on a rental application or when interviewing potential tenants, and how you deal with tenants who rent from you. Failure to know and follow the law may result in costly discrimination complaints and lawsuits.
While Tennessee landlords are legally free to reject applicants—based on a bad credit history, negative references, from previous landlords, past behavior, such as consistently paying rent late, or other factors that make them a bad risk—this doesn't mean that anything goes. You are not free to discriminate against prospective tenants based on their race, religion, national origin, sex, familial status (such as having children under age 18) or physical or mental disability. These are "protected categories" under the federal Fair Housing Act of 1968, as amended (42 U.S. Code § § 3601-3619 and 3631). There are a few exemptions to federal anti-discrimination rules, including owner-occupied buildings with four or fewer units, and single-family houses, as long as the owner owns no more than three rental houses at a time.
The HUD website provides extensive details on fair housing laws. Be sure to also check with your state fair housing agency for additional laws prohibiting discrimination or limiting landlord exemptions.
All landlords want their tenants to pay rent on time and without hassle. If you need to raise the rent or evict a tenant who hasn't paid rent, you'll want to be sure you comply with the specific rules and procedures in Tennessee. State law regulates several rent-related issues—for example, landlords must give tenants who have not paid rent at least five days' notice before filing for eviction. For details, see Tennessee Late Fees, Termination for Nonpayment of Rent, and Other Rent Rules.
Security deposits are among the biggest sources of dispute between landlords and tenants. To avoid problems, be sure when the deposit must be returned (within 30 days after a tenant moves out) and other restrictions on deposits in Tennessee. Using a landlord-tenant checklist when a tenant moves in (and moves out of) a rental, and sending a written security deposit itemization when the tenant leaves will go a long way in avoiding disputes.
You are legally required to keep rental premises livable in Tennessee, under a legal doctrine called the "implied warranty of habitability." If you don't take care of important repairs, such as a broken heater, tenants in Tennessee may have several options, including the right to withhold rent or "repair and deduct."
Every Landlord's Legal Guide, by Marcia Stewart, Ralph Warner, and Janet Portman (Nolo) includes extensive advice on establishing a repair and maintenance system that will help prevent problems, such as tenant rent withholding or injuries to tenants due to defective conditions in the rental.
The rental agreement or lease that you and your tenant sign sets out the contractual basis of your relationship with the tenant, and is full of crucial business details, such as how long the tenant can occupy the rental and the amount of the rent. Taken together with federal, state, and local landlord-tenant laws, your lease or rental agreement sets out all the legal rules you and your tenant must follow.
Problems arise when landlords include illegal clauses in the lease, such as a waiver of landlord responsibility to keep premises habitable, or when landlords fail to make legally required disclosures (discussed in the next section). And even if it's not required that you cover a particular issue in your lease, such as how when and how you can enter rental property, you can avoid all kinds of disputes by using an effective and legal lease and rental agreement that clearly informs tenants of their responsibilities and rights.
Under Tennessee law, landlords must make certain disclosures to tenants (usually in the lease or rental agreement), including the landlord's right to show the premises to prospective tenants during the final month of a tenancy. Landlords must also comply with required federal disclosures regarding lead-based paint on the property, or face hefty financial penalties.
It is illegal to retaliate in Tennessee —for example, by attempting to raise the rent or evict a tenant for complaining about an unsafe living condition. To avoid problems, or counter false retaliation claims, establish a good paper trail to document how you handle repairs and other important facts of your relationship with your tenant.
State laws specify when and how a landlord may terminate a tenancy. Failure to follow the legal rules may result in delays (sometimes extensive) in terminating a tenancy. For example, a landlord in Tennessee must give a tenant who has repeatedly violated the lease 14 days' notice before starting eviction proceedings. See State Laws on Unconditional Quit Terminations and State Laws on Termination for Violation of Lease for more information on these types of termination notices in Tennessee.
Be sure to check out government agencies, such as the U.S. Department of Housing and Urban Development (HUD) and state fair housing agencies which provide useful legal information and publications on their websites. You'll also find helpful guides to tenant rights and landlord-tenant law on the website of your state attorney general's office or consumer protection agency.
Finally, if you have legal questions about your rental unit, you should consult with an experienced landlord-tenant attorney in Tennessee.