Tennessee real estate: buy or sell with a local AXEN agent
Under T.C.A. 67-4-409 Tennessee is one of the few states where the buyer pays the transfer tax, and borrowers pay a second tax on the loan. There is no state income tax on wages, homes are taxed on 25% of value, and a seller can sell a home fully "as is." Here is what is the same everywhere in Tennessee, and where to search homes.
Tennessee cities we cover
Each guide covers the local neighborhoods, costs and rules for that city.
What every Tennessee buyer and seller should know
The buyer pays the transfer tax
Tennessee charges 37 cents per $100 on the greater of the sale price or the property's value. State law puts this tax on the grantee, usually the buyer, and the county register of deeds collects it before recording. A contract can make the seller fund it at closing, but the law still owes it from the grantee.
Borrowers pay a second recording tax
T.C.A. 67-4-409 sets the indebtedness tax at 11.5 cents per $100 of the loan amount, and the first $2,000 is not taxed. The borrower pays it. Cash buyers skip this one entirely.
A seller gives a disclosure or a signed "as is" disclaimer
The owner has to hand you a residential property disclosure listing known defects, or a disclaimer saying you take the home as is. For the disclaimer to work, you have to waive the disclosure. Either one comes before the contract is fully signed. Foreclosures, estates, divorce transfers and a builder's first sale with a written warranty are exempt.
A missing disclosure does not cancel the contract
Tennessee law says failing to give the disclosure does not let you terminate. That surprises people coming from other states. If the statement itself is wrong, you can end the deal before closing or sue for actual damages, but you have to file within one year of getting the statement or of closing, whichever comes first.
Known sinkholes have to be disclosed
A seller has to tell you about a known sinkhole before the contract is signed, either in the contract or in a separate writing you sign for. State law defines a sinkhole as a void from limestone or dolostone dissolving underground. Middle Tennessee sits on that rock, so this one is not theoretical.
A lawyer is not required at closing
No Tennessee law makes you hire an attorney. Title and escrow companies handle most closings. The Attorney General has said non-lawyers preparing deeds and related papers for pay can cross into law business, which is why an attorney is still involved in many closings for the documents.
No income tax on wages, and homes are taxed at 25%
The Hall income tax was repealed for tax years starting January 1, 2021. A home you live in is assessed at 25% of its appraised value. Residential property with two or more rental units is classed commercial and assessed at 40%. Counties reappraise on a 4, 5 or 6 year cycle, and after a reappraisal the certified tax rate is set so total collections stay about the same.
Greenbelt land can trigger rollback taxes
Land in the Agricultural, Forest and Open Space program is taxed on its use value, not market value. If a sale takes the land out of the program, rollback taxes come due: 3 years for farm or forest land, 5 years for open space. The seller owes them unless a written contract says otherwise.
Closing costs in Tennessee: who pays what
Who pays what in Tennessee. The two recording taxes are set by state law. Everything else is custom and can be negotiated.
| Buyer pays | How it works |
|---|---|
| Transfer tax | $0.37 per $100 of the price or value. In Tennessee this one is on the buyer. |
| Mortgage recordation tax | $0.115 per $100 of the loan, with the first $2,000 exempt. Cash buyers do not pay it. |
| Recording the deed and deed of trust | Your county's fee schedule, per document plus a per-page charge over 10 pages. |
| Lender's title policy | Based on the loan amount, at the title company's filed rates. |
| Owner's title policy | Based on the sale price, one time. Often a buyer cost here. |
| Closing or settlement fee | A flat fee set by the closing office. |
| Inspections | Home inspection, termite report and a septic inspection where there is a system. |
| Survey | A flat fee based on acreage and the shape of the lot. |
| HOA transfer or estoppel fee | Set by the association or its manager. |
| Seller pays | How it works |
|---|---|
| Payoff of loans and liens | Your lender's payoff statement. |
| Recording the release of the old deed of trust | Your county's fee schedule. |
| Property tax proration | Your share of the year's bill through the closing date. |
| Greenbelt rollback taxes | 3 years on farm or forest land, 5 years on open space, if the sale pulls the land out of the program. |
| Repairs agreed after inspection | Whatever the written amendment says. |
| HOA dues and document fees | Your share of dues plus whatever the association charges. |
| Owner's title policy, if the contract says so | Based on the sale price. |
| Termite treatment or repair, if required | A bid from the treatment company. |
Closing fees, title premiums, survey and inspection prices are set by private companies, not the state. Recording fees and reappraisal years vary by county. Ask your AXEN agent for the numbers in your county before you sign.
How a Tennessee home purchase runs
From binding agreement to recording, most Tennessee sales run 30 to 45 days. Here is the order, and which parts are law rather than custom.
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Binding agreement. The contract is binding when everyone has signed and that is delivered. Tennessee's disclosure law keys off full execution, so this date matters.
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Earnest money deposit. Your agent gives the check to the holding broker. Trust money goes into a separate escrow account promptly after acceptance unless the contract names another holder. One to three days.
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Inspections and resolution. You order the home, termite and septic inspections, then ask for repairs. The timelines come from the contract, not the statute. Usually 7 to 14 days.
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Loan and appraisal. You apply, the lender orders the appraisal, and underwriting runs. Usually 20 to 35 days.
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Title search and commitment. The closing office searches the register of deeds, finds liens and easements, and issues the commitment. One to two weeks.
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Survey, if you order one. You or your lender order it to set the boundaries and spot encroachments. One to two weeks.
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Closing Disclosure delivered. Your lender has to get the Closing Disclosure to you at least 3 business days before closing. That one is federal law.
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Final walkthrough. You check the repairs and the condition, a day or two before closing.
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Closing and recording. Everyone signs, the money goes out, and the closing office records the deed and deed of trust with the county register, paying the transfer and mortgage taxes then. Same day or the next business day.
Tennessee by region
Tennessee stretches over 400 miles and its two big markets have little in common. Tap a city for homes for sale there.
Middle Tennessee
The state capital region, sitting on limestone and karst ground, so sinkhole disclosure and septic questions come up often once you leave the city sewer lines. Short-term rental permits here are strict and city-run. Nearby: Murfreesboro, Franklin and Clarksville.
West Tennessee
The Mississippi River corner of the state, with flatter land, older housing stock, and Shelby County offices handling most closings. Nearby: Jackson, Germantown and Collierville.
AXEN Realty in Tennessee
Every AXEN agent in Tennessee works under a licensed managing broker: Rick Jackson (AXEN Realty, LLC, firm license 266898). See every state on the state brokers page.
Buying? Start with the home buying guide and get pre-approved.
Selling? Read the home selling guide and get your home value.
Moving here? Read buying in a new state.
Real estate agent? Changing brokerages in Tennessee: you file it online; state fee: $25. See how to transfer a Tennessee license, the switching checklist, advice for new agents and how keeping 100% works.
Tennessee real estate questions
The listing says "as is." Can I still inspect?
Yes. An as-is disclaimer means the seller is not promising anything about condition, and you have to waive the written disclosure for it to apply. It does not block your inspection. Your inspection rights come from the contract, so keep that period in writing.
Who holds my earnest money?
The principal broker keeps a separate escrow or trustee account for money held in trust, and it goes in promptly after the offer is accepted unless the contract names a different holder. Brokers have to keep records of who paid in, when, and who was paid out.
Do I have to hire a lawyer to buy a home here?
No Tennessee law requires it, and title and escrow companies close most sales. The Attorney General has warned that non-lawyers preparing real estate documents for pay can amount to law business, which is why attorneys are still involved in many closings. Hire one if your deal is complex.
The house has a septic system. What should I check?
Any new septic system, or the repair of a failing one, needs a construction permit from the state, a licensed installer, and a final inspection. Ask for the permit and the Certificate of Completion, and get the system inspected and pumped before closing.
Can I rent the house out short-term?
That depends on the city and county, not the state. Nashville requires a Metro Codes permit before you list the property and sets rules on how long a stay can be. Other cities have their own rules. Short-term rental operators also owe state and local occupancy taxes.
Is a termite letter required?
Tennessee law does not require one for a private sale. Most lenders here ask for a wood destroying insect report before closing, and it is standard practice. Order it early, because treatment or repair takes time. Who pays is a contract term, not a legal rule.
Will my property taxes jump right after I buy?
Your purchase by itself does not set a new tax value. Under T.C.A. 67-5-1601 counties revalue property on a 4, 5 or 6 year reappraisal cycle, and after a reappraisal the certified tax rate is adjusted so total collections stay about level. Residential value is assessed at 25%.
Are there property tax breaks for seniors, disabled owners or veterans?
Yes. Tennessee's tax relief program reimburses part of the taxes paid by qualifying homeowners age 65 and older, disabled homeowners, and disabled veterans or their surviving spouses. Apply at your county trustee. Some counties and cities also offer a tax freeze starting at age 65.