According to RentData.org, the 2025 fair market rent (FMR) in the Nashville metro area is $1,827 per month for a 2-bedroom apartment. While it may not seem high, it is, especially compared to the U.S. average.
Given that the FMR in Tennessee's capital itself is already high, it's understandable for renters to be wary of properties with stringent policies on security deposits. For this reason, landlords, especially first-timers, should be careful when setting rules for their properties' rental deposits.
To that end, our team at PMI Music City put together this guide on landlord deposit rules. Read on for insights into rental deposit laws and lease deposit advice every Nashville landlord should be aware of.
Understanding Security Deposits
A security deposit is money collected from tenants to cover potential unpaid rent or property damage. It acts as a financial safeguard for landlords.
However, it's essential to understand how to handle security deposits correctly to avoid disputes. Here are some key points to keep in mind:
- According to NOLO.com, Tennessee has no legal statutory limit on security deposit amounts
- Landlords must deposit all tenants' security deposits in a state-regulated or U.S. government-regulated account (such as a bank account) used only for that purpose (TN Code § 66-28-301)
- Required return of security deposits (complete or partial) within 30 days from the termination of the lease or the tenant abandoning the property
- Provision of written leases discussing security deposit terms and conditions
Common Security Deposit Challenges
While collecting and managing security deposits might seem simple, several challenges can arise, particularly in Nashville's dynamic rental market. Here are some common issues that landlords face.
Disputed Claims
Disputes often stem from claims over what tenants or landlords consider damage versus normal wear and tear. So, during move-in, ensure you and your tenant conduct a thorough rental property inspection. Both sides must then document the property's condition with photos and written descriptions.
Refund Timing
Return the deposit promptly to avoid penalties. Establish a straightforward process to ensure the efficient handling of the entire process. Ensure everything is in writing and included in the written rental lease agreement.
The Importance of Clear Communication
The relationship between landlords and tenants can significantly affect the management of security deposits. Strong communication is a vital component of this relationship. Here are a few ways to enhance communication:
- Be transparent with your tenants about what the security deposit covers
- Provide written notices for deductions and the reasons behind them
- Keep an open line for questions and concerns regarding the process
Your Next Steps
Being a Nashville landlord requires more than just property ownership; it demands a keen understanding of local laws, particularly regarding security deposits. Mismanagement can lead to unnecessary financial loss and strained tenant relationships.
To maximize your property's potential with fewer worries, partner with our full-service property management firm, PMI Music City. From tenant screening to property upkeep, lease enforcement, and financial management, we can do all these and more on your behalf. With our skills, local knowledge, state-of-the-art technology, and support from PMI, our franchisor with over 20 years of property management expertise, we'll help make your Nashville rentals thrive.
Reach out today for a free consultation!
