Do I need a real estate license to manage vacation rentals in Tennessee?

For stays of 14 days or less, Tennessee has a separate Vacation Lodging Service firm license plus a designated agent license, and no supervising broker is required. Longer leasing for others is broker activity. Confirm your setup with the Tennessee Real Estate Commission.

When can a Tennessee vacation lodging service pay owners from escrow?

The statute says no funds leave the escrow account until the guest’s stay is complete, unless the payout follows terms disclosed to the renter in writing, and that owner revenue and commissions are paid at least monthly.

How long must Tennessee escrow records be kept?

At least three years, for both VLS firms and brokers.

Can a vacation lodging service skip the escrow account?

The statute lets a VLS file an irrevocable bank letter of credit instead. Check the amount and filing requirements with the Commission before relying on it.

Tennessee Vacation Rental Trust Accounting Rules

Tennessee at a glance

License: Vacation Lodging Service firm license + designated agent for stays of 14 days or less; broker license for other leasing
Trust account: VLS escrow account (or a bank letter of credit); brokers deposit trust money promptly
Records kept: 3 years
Reconciliation: No frequency found in the statutes or rules

Details and citations for each point are below.

Who needs a license

Leasing property or collecting rent for others for a fee is broker activity and needs a license. Doing even one such act without a required license is a violation.Tenn. Code Ann. § 62-13-102; Tenn. Code Ann. § 62-13-103
Exemptions include an owner dealing with their own property, an attorney-in-fact under a recorded power of attorney, and a resident manager or broker’s employee who manages an apartment building, duplex or residential complex (who may not negotiate rents or deposit amounts).Tenn. Code Ann. § 62-13-104

Short-term rental rules

A Vacation Lodging Service (VLS) is anyone in the business of managing, marketing, booking and renting homes owned by others to travelers staying no more than 14 days.Tenn. Code Ann. § 62-13-104
Each VLS needs a VLS firm license, and the person managing it needs a designated agent license. A supervising real estate broker is not required.Tenn. Code Ann. § 62-13-104; Vacation Lodging Service licensing
Apart from the VLS provisions, the rest of the broker chapter and its rules do not apply to a VLS. The VLS rules are in chapter 1260-07, and the designated agent is responsible for the VLS escrow account.Tenn. Code Ann. § 62-13-104; Tenn. Comp. R. & Regs. 1260-07-.01; Tenn. Comp. R. & Regs. 1260-07-.03

The trust account

A VLS must keep an escrow or trustee account for funds relating to vacation lodging services, and show proof of it when applying for the firm license and at each renewal.Tenn. Code Ann. § 62-13-104
A VLS may instead file an irrevocable letter of credit from a state or national bank (the escrow waiver). The amount and filing details are set in the statute; check them with the Commission.Tenn. Code Ann. § 62-13-104; Vacation Lodging Service licensing
Brokers (not VLS firms): each principal broker keeps a separate escrow or trustee account, and money from leases must be held in one or more escrow accounts separate from the sales account.Tenn. Comp. R. & Regs. 1260-02-.09; Tenn. Code Ann. § 62-13-321
Brokers: commingling — keeping others’ money in an account with personal or business funds — is prohibited. Interest-bearing accounts are neither required nor prohibited; the payor must agree in writing how any interest is handled.Tenn. Comp. R. & Regs. 1260-02-.09
Brokers: trust money is deposited promptly once the offer is accepted, unless the offer sets a date. The rule gives no fixed number of banking days.Tenn. Comp. R. & Regs. 1260-02-.09

Advance rents and deposits

VLS: no funds may be paid out of the escrow account until the guest’s stay is complete, unless the payout follows terms disclosed to the renter in writing. Commissions earned and revenue due to owners must be paid at least monthly, and escrowed funds paid out without unreasonable delay.Tenn. Code Ann. § 62-13-104
Tennessee’s landlord-tenant security deposit rules apply only in counties of more than 75,000 people, and the act excludes transient lodging subject to occupancy tax.Tenn. Code Ann. § 66-28-102; Tenn. Code Ann. § 66-28-301

Records and how long to keep them

VLS firms keep accurate records of the escrow account for at least three years.Tenn. Code Ann. § 62-13-104
Brokers keep escrow records for at least three years, showing the depositor, date of deposit, date of withdrawal and payee. The Commission’s director may examine escrow records.Tenn. Code Ann. § 62-13-321; Tenn. Code Ann. § 62-13-312

Reconciliation and ledgers

We found no reconciliation frequency and no per-owner ledger requirement in the VLS statute, the broker escrow statute, Rule 1260-02-.09 or chapter 1260-07. A monthly three-way reconciliation is still the usual practice.Tenn. Code Ann. § 62-13-104; Tenn. Code Ann. § 62-13-321; Tenn. Comp. R. & Regs. 1260-02-.09

Check with the Tennessee Real Estate Commission

We could not confirm these from a primary source, so we don’t state them as rules:

Statute text was read on FindLaw, current to January 2, 2024 — amendments since then were not checked against the official code.
Whether a VLS escrow account must be in Tennessee, insured, labeled “escrow” or “trust”, or may earn interest — we found nothing that says.
Whether a VLS may keep any of its own money in the escrow account, and any VLS deposit deadline.
How a licensed broker or affiliate broker doing VLS work is supervised, and the letter-of-credit amount and filing date.

Sources

Each source was read on 2026-10-25.

Tenn. Code Ann. § 62-13-102 — FindLawRead on FindLaw (Tennessee Code as of January 2, 2024); the official code host could not be fetched.
Tenn. Code Ann. § 62-13-103 — FindLawRead on FindLaw (Tennessee Code as of January 2, 2024); the official code host could not be fetched.
Tenn. Code Ann. § 62-13-104 — FindLawRead on FindLaw (Tennessee Code as of January 2, 2024); the official code host could not be fetched.
Tenn. Code Ann. § 62-13-312 — FindLawRead on FindLaw (Tennessee Code as of January 2, 2024); the official code host could not be fetched.
Tenn. Code Ann. § 62-13-321 — FindLawRead on FindLaw (Tennessee Code as of January 2, 2024); the official code host could not be fetched.
Tenn. Code Ann. § 66-28-102 — FindLawRead on FindLaw (Tennessee Code as of January 2, 2024); the official code host could not be fetched.
Tenn. Code Ann. § 66-28-301 — FindLawRead on FindLaw (Tennessee Code as of January 2, 2024); the official code host could not be fetched.
Tenn. Comp. R. & Regs. 1260-02-.09 — Cornell LIIRead on Cornell LII; the official rules PDF could not be fetched.
Tenn. Comp. R. & Regs. 1260-07-.01 — Cornell LIIRead on Cornell LII; the official rules PDF could not be fetched.
Tenn. Comp. R. & Regs. 1260-07-.03 — Cornell LIIRead on Cornell LII; the official rules PDF could not be fetched.
Vacation Lodging Service licensing — Tennessee Real Estate Commission

The reconciliation itself

Whatever your state’s rules, the monthly check is the same idea: the bank, your books and what you hold for each owner and guest should agree. Our three-way reconciliation guide walks through it with a free worksheet. If your reservations run on VacayOps, trust accounting is part of the Full Platform: guest payments are recorded into trust, owner statements build each owner’s balance, and the month’s reconciliation is signed off and exported as a PDF for your accountant. VacayOps records and reconciles the money in your own bank and processor accounts. It never holds or moves funds.

Trust accounting in VacayOps Book a 30-minute walkthrough

Tennessee trust accounting rules for vacation rental managers