How Much Deposit Can a Contractor Ask For in Tennessee?
Tennessee's fetchable state contractor rules set no maximum deposit; they govern licensing, bonding, advertising, and related duties for home improvement contractors.
Tennessee has no fetchable official rule that caps how large a deposit or down payment a contractor may request. What the state's published rules do address is who must be licensed, the bond that backs a home improvement contractor, how the license law is adopted county by county, and duties around advertising and changes of information. The paragraphs below summarize those requirements, each tied to the exact language of the Tennessee Secretary of State's official rules.
Rules that bear on your deposit
Tennessee's rules require home improvement contractors who must be licensed to hold a license, a requirement in effect since the start of 1989. 1
For home improvement work, the rules incorporate the statutory definitions of Tenn. Code Ann. section 62-6-501 by reference rather than restating them. 2
A home improvement contractor's licensure is backed by a ten thousand dollar surety bond from an approved insurer authorized to do business in Tennessee, which protects a claimant harmed by a breach of the home improvement contract rather than capping deposits. 3
The rules regulate a home improvement contractor's advertising, requiring television or radio announcements to state the contractor's name and license number. 4
A licensed home improvement contractor must notify the Board in writing within thirty days of any change of control in ownership, management, address, or trade name. 5
The home improvement license law applies in a given county only where that county's legislative body has adopted it by a two-thirds majority vote. 6
For general contractors, the licensing rules define classifications such as commercial building contractor and set the scope of construction work a licensee may bid on and contract for. 7
Sources
Tennessee's rules require home improvement contractors who must be licensed to hold licenses, effective on and after January 1, 1989.
The Tennessee home improvement rules incorporate the definitions in Tenn. Code Ann. section 62-6-501 by reference.
The rules require a ten thousand dollar surety bond for a home improvement contractor, issued by an approved insurer authorized to do business in Tennessee.
The rules require a home improvement contractor's television or radio announcements to state the contractor's name and license number.
A licensed home improvement contractor must notify the Board in writing within thirty days of any change of control in ownership, management, address, or trade name.
The home improvement license law is adopted by a county's legislative body through a two-thirds majority vote.
Tennessee's contractor-licensing rules define a commercial building contractor by the scope of construction work the licensee may bid on and contract for.
Frequently asked questions
- Does Tennessee cap how much deposit a contractor can ask for?
- No fetchable Tennessee state rule sets a maximum deposit or down payment. The Board for Licensing Contractors rules that are publicly published govern licensing, a $10,000 surety bond, advertising, and change-of-information duties, but they do not limit deposit amounts. Deposit terms are generally left to the written agreement between you and the contractor.
- What protection does the bond give if a deposit is misused?
- A licensed home improvement contractor must carry a $10,000 surety bond for the benefit of a claimant damaged by the contractor's breach of a home improvement contract. That bond, not a deposit cap, is the state's financial backstop, and its availability depends on the contractor being properly licensed.
Last reviewed August 4, 2026
This page is general information about state law, not legal advice. Laws change, and how they apply depends on the facts of your situation.