Can security deposit be applied towards the unpaid rent?

Full question:

Our LL has given us a 30 day notice that she is terminating the lease, the rent was late but paid in full for June, now she is telling us we have until July 16th to get out or she is changing the locks, can she do this? She said we have until noon that day to leave and we will owe her $500 for half a month. She will owe us that from the deposit, so do we have to pay half a month or can we let her keep the deposit?

• Category: Landlord Tenant
• Date: 04/07/2025
• State: Tennessee

Answer:

The answer to the first question will be subjective and will depend on the terms of the lease agreement such as the agreed date for payment of rent, notice period, consequences of late payment etc.

Tenn. Code Ann. § 66-28-201 speaks about the terms and conditions included in a rental agreement.

66-28-201. Terms and conditions.

(a) The landlord and tenant may include in a rental agreement, terms and conditions not prohibited by this chapter or other rule of law including rent, term of the agreement, and other provisions governing the rights and obligations of parties. A rental agreement cannot provide that the tenant agrees to waive or forego rights or remedies under this chapter. The landlord or the landlord's agent shall advise in writing that the landlord is not responsible for, and will not provide, fire or casualty insurance for the tenant's personal property.

(b) In absence of a lease agreement, the tenant shall pay the reasonable value for the use and occupancy of the dwelling unit.

(c) Rent shall be payable without demand at the time and place agreed upon by the parties. Notice is specifically waived upon the nonpayment of rent by the tenant only if such a waiver is provided for in a written rental agreement. Unless otherwise agreed, rent is payable at the dwelling unit and periodic rent is payable at the beginning of any term of one (1) month or less and otherwise in equal monthly installments at the beginning of each month. Upon agreement, rent shall be uniformly apportionable from day to day.

(d) There shall be a five-day grace period between the day the rent was due and the day a fee for the late payment of rent may be charged. If the last day of the five-day grace period occurs on a Saturday, Sunday or legal holiday, as defined in § 15-1-101, the landlord shall not impose any charge or fee for the late payment of rent, provided that the rent is paid on the next business day. Any charge or fee, however described, which is charged by the landlord for the late payment of rent shall not exceed ten percent (10%) of the amount of rent past due.

(e) (1) No charge or fee for the late payment of rent due from a tenant in a public housing project shall exceed five dollars ($5.00) per month. No late charge or fee shall be assessed such tenant unless more than fifteen (15) days have elapsed since the rent was due.

(2) The provisions of this subsection (e) shall apply only to counties with a population between two hundred fifty thousand (250,000) and three hundred thousand (300,000) according to the 1980 federal census or any subsequent federal census.

Further Tenn. Code Ann. § 66-28-505 speaks about Noncompliance by tenant -- Failure to pay rent. It reads as follows:

(a) Except as provided in this chapter, if there is a material noncompliance by the tenant with the rental agreement or a noncompliance with § 66-28-401 materially affecting health and safety, the landlord may deliver a written notice to the tenant specifying the acts and omissions constituting the breach, and that the rental agreement will terminate upon a date not less than thirty (30) days after receipt of the notice. If the breach is not remedied in fourteen (14) days, the rental agreement shall terminate as provided in the notice, subject to the following. If the breach is remediable by repairs or the payment of damages or otherwise and the tenant adequately remedies the breach prior to the date specified in the notice, the rental agreement will not terminate. If substantially the same act or omission which constituted a prior noncompliance of which notice was given recurs within six (6) months, the landlord may terminate the rental agreement upon at least fourteen (14) days' written notice specifying the breach and the date of termination of the rental agreement.

(b) If rent is unpaid when due and the tenant fails to pay, written notice by the landlord of nonpayment is required unless otherwise specifically waived in a written rental agreement. The rental agreement is enforceable for collection of rent for the remaining term of the rental agreement.

(c) Except as provided in this chapter, the landlord may recover damages and obtain injunctive relief for any noncompliance by the tenant with the rental agreement or § 66-28-401. The landlord may recover reasonable attorney's fees for breach of contract and nonpayment of rent as provided in the rental agreement.

(d) The landlord may recover punitive damages for willful destruction of property

The law regarding security deposits in Tennessee is as follows:

Tenn. Code Ann. § 66-28-301, Security deposits

(a) All landlords of residential property requiring security deposits prior to occupancy are required to deposit all tenants' security deposits in an account used only for that purpose, in any bank or other lending institution subject to regulation by the state of Tennessee or any agency of the United States government. Prospective tenants shall be informed of the location of the separate account.

(b) Within ten (10) business days of the termination of occupancy, but prior to any repairs or cleanup of the premises:

(1) The landlord shall inspect the premises and compile a comprehensive listing of any damage to the unit that is the basis for any charge against the security deposit and the estimated dollar cost of repairing the damage. The tenant shall then have the right to inspect the premises to ascertain the accuracy of the listing. The landlord and the tenant shall sign the listing, which signatures shall be conclusive evidence of the accuracy of the listing. If the tenant refuses to sign the listing, the tenant shall state specifically in writing the items on the list to which the tenant dissents, and shall sign the statement of dissent; or

(2) If the tenant has moved or is otherwise inaccessible to the landlord, and, if at least ten (10) days before the lease termination date, the landlord has given the tenant written notice of the tenant's right to schedule a mutual inspection of the subject premises with the landlord during normal business hours and the tenant has not contacted the landlord prior to vacating the premises or the tenant has waived in writing the right of inspection, the landlord shall then inspect the premises and compile a comprehensive listing of any damage to the unit that is the basis for any charge against the security deposit and the estimated dollar cost of repairing the damage. The landlord shall then mail a copy of the listing of damages and estimated cost of repairs to the tenant at the tenant's last known mailing address. After mailing the copy of the listing of damages and estimated cost of repairs to the tenant, the landlord may begin to prepare the unit for occupancy.

(c) No landlord shall be entitled to retain any portion of a security deposit if the security deposit was not deposited in a separate account as required by subsection (a) and if the final damage listing required by subsection (b) is not provided.

(d) A tenant who disputes the accuracy of the final damage listing given pursuant to subsection (b) may bring an action in a circuit or general sessions court of competent jurisdiction of this state. The tenant's claim shall be limited to those items from which the tenant specifically dissented in accordance with the listing or specifically dissented in accordance with subsection (b); otherwise the tenant shall not be entitled to recover any damages under this section.

(e) Should a tenant vacate the premises with unpaid rent or other amounts due and owing, the landlord may remove the deposit from the account and apply the moneys to the unpaid debt.

(f) In the event the tenant leaves not owing rent and having any refund due, the landlord shall send notification to the last known or reasonable determinable address, of the amount of any refund due the tenant. In the event the landlord shall not have received a response from the tenant within sixty (60) days from the sending of such notification, the landlord may remove the deposit from the account and retain it free from any claim of the tenant or any person claiming in the tenant's behalf.

(g) This section does not preclude the landlord or tenant from recovering other damages to which such landlord or tenant may be entitled under this chapter.

(h) (1) Notwithstanding the provisions of subsection (a), all landlords of residential property shall be required to notify their tenants at the time such persons sign the lease and submit the security deposit, of the location of the separate account required to be maintained pursuant to this section, but shall not be required to provide the account number to such persons, nor shall they be required to provide such information to a person who is a prospective tenant.