Guide · Tennessee investors and landlords
Remodeling a rental in Tennessee? Your lien risk is different.
Tennessee protects people who live in their homes: suppliers and subcontractors can't put a lien on them. That protection disappears on a rental, a flip or an investment property, and most investors don't know it until a lien shows up at closing.
The short version
- On a home you live in, only your contractor can file a lien (Tenn. Code § 66-11-146).
- On a rental or investment property, every supplier and sub your contractor hires can lien it if they aren't paid, even after you've paid your contractor in full.
- They don't have to warn you first. On a 1 to 4 unit property they can serve notice up to 90 days after the job is finished (§§ 66-11-115, 66-11-112).
- The fix: know who's on your job, and collect a lien release from each of them before you pay.
Live in it vs. rent it out
| Home you live in | Rental or investment property | |
|---|---|---|
| Who can file a lien | Only the contractor you hired | Your contractor, plus every supplier and sub on the job |
| Warning before a lien | Not needed: suppliers and subs can't lien | None. They can serve notice up to 90 days after the job is finished |
| Lien releases you need | Your contractor's, with each payment | Your contractor's, and one from every supplier and sub |
| Pay-twice risk | Low | Real: you pay the contractor, the contractor doesn't pay the lumber yard |
"Home you live in" means your main residence: a house, or a building of 2 to 4 units where you live in one.
How investors end up paying twice
You hire a contractor to turn over a duplex. You pay every draw on time. Your contractor falls behind with the lumber yard and the plumbing sub, then stops answering the phone. Two months after the job wraps, the lumber yard serves you a notice of lien for $18,000, and the plumber follows with $9,000.
You've already paid for that lumber and that plumbing once. To clear the liens before you can sell or refinance, you pay again. On a home you lived in, Tennessee wouldn't allow those liens at all. On a rental, it does. See how the money flows.
Why you don't see it coming
In some states, suppliers must mail the owner a notice when they start on a job, so at least you know who they are. In Tennessee, on a property of 1 to 4 units, there's no notice up front. A supplier or sub keeps its lien rights by serving you a notice of lien within 90 days after the work is finished (Tenn. Code §§ 66-11-115, 66-11-112).
So unless you ask, you may not know who supplied your job until after you've made the final payment.
How to protect an investment remodel
- Get the list. Before you sign, have your contractor list every supplier and subcontractor they plan to use, and agree to tell you about new ones.
- Collect releases from everyone, every draw. Before each payment, get a conditional lien release from your contractor and from each supplier and sub on the list. After the payment clears, get the releases confirming they were paid.
- Use joint checks for big suppliers. A check made out to both your contractor and the lumber yard means the supplier gets paid, or signs off that it was.
- Get the sworn affidavit at the end. Tennessee requires your contractor, once the job is done and paid, to give you a sworn statement that everyone has been paid, and to hold you harmless if anyone claims otherwise (§ 66-11-205).
- Consider a Notice of Completion. Recorded with the county register of deeds, it gives anyone with an unrecorded lien claim 10 days to act on a 1 to 4 unit property (§ 66-11-143).
Track every supplier and release on your rental remodel
Tell us it's an investment property and we'll put every supplier and sub on your payment checklist, request each release in one tap, and tell you when it's safe to pay each draw.
Common questions
I own the property through an LLC. Does that matter?
It can. Tennessee's protection is for an owner who lives in the home as their main residence. Ask a Tennessee attorney how it applies to property held in an LLC or trust.
What about a building with 5 or more units?
Different rules apply: suppliers and subs must send a notice of nonpayment within 90 days after each month they worked (§ 66-11-145). Ask your attorney about larger projects.
My contractor says their suppliers always get paid. Isn't that enough?
Most do pay. Releases are how you know, before the money leaves your account. A good contractor won't mind collecting them.
I live in one unit of my duplex. Which side am I on?
If it's a building of 2 to 4 units and you live in one as your main residence, you get the homeowner protection.
General information, not legal advice. Sources: Tennessee Code Annotated §§ 66-11-101, 66-11-112, 66-11-115, 66-11-143, 66-11-145, 66-11-146 and 66-11-205. Laws change; ask a Tennessee attorney about your property.
General information about California rules, written by a general contractor. Not legal advice; for advice about your situation, talk to a California attorney.