Tennessee Late Fee Laws: The Strict 10% Cap and 5-Day Grace Period

Tennessee is known for being relatively landlord-friendly, but it enforces surprisingly rigid consumer protections regarding the collection of rent. State law dictates exactly how much a landlord can charge for a late fee and firmly establishes a mandatory grace period.

The Mandatory 5-Day Grace Period (URLTA Counties)

In Tennessee counties governed by the Uniform Residential Landlord and Tenant Act (URLTA)—typically those with populations over 75,000—a landlord cannot charge a late fee immediately when rent is late.

Under T.C.A. § 66-28-201, a landlord must provide a mandatory five-day grace period following the day the rent was due.

• The rent must be accepted without incurring any late fees during this five-day window.
• Non-URLTA Counties: In smaller counties not governed by URLTA, there is no statutory mandate for a grace period unless specified in the lease.

Calculating the Deadline (Sunday/Holiday Rule)

The grace period is five days. If the fifth day of the grace period falls on a Sunday or a legally recognized state holiday, the grace period is extended to the next business day (T.C.A. § 66-28-201(d)).

Example Calculation:

• Rent is due on the 1st of the month.
• The 5-day grace period covers the 2nd, 3rd, 4th, 5th, and 6th.
• If the 6th (the fifth day) is a Sunday, the grace period is extended to Monday the 7th.
• The landlord could not charge a late fee until Tuesday the 8th.

The 10% Late Fee Cap (URLTA Counties)

In URLTA counties, Tennessee law strictly caps the late fee amount. A late fee cannot exceed 10% of the amount of rent past due.

• Non-URLTA Counties: There is no statutory percentage cap; late fees must simply be "reasonable" as determined by a judge if contested.
• Example: If the monthly rent is $1,500, the maximum late fee the landlord can charge is $150.
• Landlords are prohibited from calculating late fees on top of other charges (like utility pass-throughs or previous unpaid late fees). The 10% calculation applies only to the base rent amount currently in default.

Lease Requirements

For a late fee to be legally enforceable in Tennessee, the specific policy must be explicitly stated in the written rental agreement. This includes both the grace period details and the exact fee amount/percentage. If the lease is silent on late fees, none can be charged.

Bounced Check Fees

Separate from standard late fees, if a tenant pays rent with a check that bounces due to insufficient funds (NSF), Tennessee law permits the landlord to charge a returned check fee of up to $30.

Eviction Notices During the Grace Period

A common and costly mistake landlords make in General Sessions Court is filing an eviction notice prematurely. If a landlord serves a 14-Day Notice to Pay or Quit before the mandatory 5-day grace period has expired, a judge will likely dismiss the Detainer Warrant as legally invalid, forcing the landlord to restart the entire process and lose valuable time.

How Landager Helps

Managing Tennessee properties across different URLTA and non-URLTA counties requires precision. Landager automates the mandatory 5-day grace period calculation while ensuring your late fees never exceed the 10% statutory cap. Whether you're managing Nashville portfolios or smaller rural units, Landager generates compliant notice forms and tracks security deposits in accordance with T.C.A. § 66-28-301, keeping you audit-ready and legally protected.

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