Tennessee Contractor Deposit Limit (2026): One Third, in Nine Counties
Tennessee caps home improvement deposits at one third, but only in the nine counties that adopted the Home Improvement law. Quoted from T.C.A. 62-6-510 and worked.
Not legal advice. General information from each state's statutes, checked Oct 20, 2026. Local rules and the facts of your contract can change the answer; for a specific contract, ask a lawyer licensed in your state.
Set the deposit
Every payment tied to a stage
The deposit and payment schedule in the Clamp app: a $1,000 deposit due when the customer signs, then every other payment tied to a stage of the job. $1,000 on this $17,699 bathroom is under every state's cap. Sample data.
What the law says
“Receipt at or before the time of execution of a contract of a deposit of more than one third (1/3) of the contract price, unless:”
The maximum deposit, worked
| Contract price | How it works out | Maximum deposit |
|---|---|---|
| $3,000 | At or under $3,000, the cap does not apply | No cap |
| $8,000 | $8,000 divided by 3, rounded down to the cent | $2,666.66 |
| $10,000 | $10,000 divided by 3, rounded down to the cent | $3,333.33 |
| $25,000 | $25,000 divided by 3, rounded down to the cent | $8,333.33 |
| $60,000 | $60,000 divided by 3, rounded down to the cent | $20,000 |
Where it applies and the exceptions
Where it applies
In counties exempt from licensure in 2007, the county legislative body may vote to make the part apply there (T.C.A. 62-6-516(b)). The state contractors board says it "only applies to the counties adopting the law": the nine listed above, as of October 20, 2026.
The exceptions
A performance and payment or lien and completion bond of at least 1% of the contractor's home improvement net sales, or an owner who, after written notice of the right to withhold final payment, chooses early final payment or agrees to a schedule of payments.
Covers
Home improvements to 1 to 4 dwelling units over $3,000, by any person, licensed or not; not new homes. No payment can be taken before the contract is signed, and the part can't be waived by agreement.
The penalty
A Class A misdemeanor, and each violation is a separate offense (T.C.A. 62-6-512).
Also in the law
- A 2014 bill (HB 2297 / SB 2051) would have extended the Home Improvement law to the whole state. It did not pass.
- State consumer releases say "State law prohibits requiring more than one-third down payment" without naming the counties; the statute and the board limit it to the adopting counties.
Tennessee deposit questions
Does Tennessee's one-third rule apply statewide?
No. It applies in the nine counties that adopted the Home Improvement law. Elsewhere in Tennessee there is no statewide deposit cap.
Compare other states
How we checked
We read each state's statute or licensing rule on the official legislature or agency site and quote it as written. Where the official site would not load, the row says so and names the copy we read. A state stays "still being checked" until we have read the full rule; we never mark it "no cap" before then. Last checked .
This guide explains what the statutes say. It is not legal advice; for a specific contract, ask a lawyer licensed in your state.