Buying a Short Term Rental in Middle Tennessee: 2026 Rules
Does short term rental approval transfer when you buy the house?
No, and this is the single most expensive misunderstanding in Middle Tennessee short term rental purchases. Tennessee's Short-Term Rental Unit Act protects properties that were already operating when a local ordinance took effect, but T.C.A. 13-7-603(a) states plainly that this legacy status ends when the property is sold or transferred. The seller's grandfathered right does not come with the deed. As the new owner, you have to qualify under whatever ordinance is in force today, in the jurisdiction where the property sits.
By Khristian Schlemmer | August 27, 2026
Every few months I get the same call. Someone found a listing marketed as a turnkey Airbnb with two years of booking history and a strong revenue number, and they want to write an offer.
My first question is never about the numbers. It is: has anyone confirmed that you can legally operate it after closing?
The answer is often no, and the reason it matters comes down to one sentence in a state law most buyers have never heard of.
The Legacy Clause and What Kills It
Tennessee passed the Short-Term Rental Unit Act in 2018, effective May 17 of that year. Public Chapter 972. The heart of it is the legacy clause at T.C.A. 13-7-603(a).
What that section says is that if a property was already being used as a short term rental before a local government enacted an ordinance regulating short term rentals, the new ordinance does not apply to it. The property keeps operating under the rules that existed when it started.
That is genuinely strong protection. It is also protection that belongs to the property under a specific owner, and it ends.
According to the summary published by the University of Tennessee Municipal Technical Advisory Service, legacy status continues until one of four things happens:
The property is sold
The property is transferred
The property stops being used as a short term rental for 30 continuous months
The property has violated generally applicable local laws three or more separate times
Read the first one again. The closing that makes you the owner is the event that terminates the protection.
So a seller can truthfully tell you the house has operated as a short term rental for six years without a permit, and truthfully tell you they have never had a problem, and every word of that can be accurate while being completely irrelevant to what you will be allowed to do on day one.
What Being Used as a Short Term Rental Actually Requires buying a short term rental in Tennessee
There is a second layer here that catches even experienced investors, because the phrase is a defined term in the statute rather than a plain-English description.
Under the Act, a property counts as having been used as a short term rental in one of two ways, depending on what the local government required at the time.
If the jurisdiction had a permit or application process under an ordinance specifically governing short term rentals, then the property qualifies only if a permit was actually issued or an application was actually approved. Operating without one does not count, no matter how long it went on.
If the jurisdiction had no such process, the property qualifies if the provider remitted the taxes due under Title 67, Chapter 6, Part 5 for filing periods covering at least six months within the twelve months immediately preceding the later of the Act's effective date or the effective date of the local ordinance.
Both paths require documentation. A booking calendar is not documentation. Revenue screenshots are not documentation. The permit, the approved application, or the tax filings are.
This is worth understanding even though the protection dies at your closing, because it tells you whether the seller's operation was ever lawful in the first place. If it was not, you are not buying a business with a compliance gap. You are buying a house that has been generating code enforcement risk.
What This Means for Your Offer
Here is how I structure a short term rental purchase in Wilson County or anywhere in the Nashville metro.buying a short term rental in Tennessee
Identify the exact jurisdiction first. This sounds obvious and it trips people constantly. A Lebanon mailing address does not mean the property is inside Lebanon city limits, and the rules inside the city and out in unincorporated Wilson County are not the same document. Pull the parcel and confirm which government has zoning authority before you do anything else. The same warning applies across the metro, where Mt. Juliet, Murfreesboro, Franklin, Brentwood, and Metro Nashville each regulate independently.
Call the planning or codes department during your inspection period. Not the listing agent, not the seller, not a forum. Ask three specific questions. Is a permit required for a short term rental at this address. Is the zoning district for this parcel one where that use is allowed. What is the application process and the approval timeline for a new owner.
Get the answer in writing. An email from a planner is worth more than a phone call you remember.
Check the private restrictions separately. T.C.A. 13-7-605 expressly authorizes condominium associations, co-ops, homeowners associations, and similar entities to prohibit or restrict short term rentals within their jurisdiction. It also allows restrictions through a lease or a recorded restrictive covenant. The state preemption that limits what cities can do does not limit what your HOA can do. If the property is in a subdivision with an association, the CC&Rs are a separate and equally binding approval, and they are exactly the kind of document that gets skimmed.
Write the contingency. If the entire investment case depends on short term rental income, the contract should not obligate you to close before you have confirmed the use is permitted. Your agent can draft that into the additional terms, which is one of several reasons it pays to read your Tennessee purchase and sale agreement carefully before you sign it.
Underwrite the fallback. Run the numbers on what happens if the answer is no. What does the property produce as a long term rental at market rent, and does that still work for you? The same math that decides whether to sell or rent out a house in Lebanon applies here in reverse. If the deal only pencils as a short term rental, you are making a bet on a regulatory answer you have not received yet.
The Financing Piece Nobody Mentions
Two things that surprise buyers on the lending side.
Short term rental income generally does not count toward qualifying the way long term lease income does. Conventional guidelines are built around signed leases and documented rental history in specific forms, and platform revenue often does not fit. Ask your lender exactly what they will and will not count before you rely on projected income.
And the occupancy classification matters. A property you intend to rent out is an investment property, not a second home, and the down payment and pricing are different.
Misrepresenting which one it is on the application is occupancy fraud, and you sign an occupancy affidavit at closing that gives the lender remedies if it turns out to be wrong. If your plan is to rent it out, tell the lender that from the first conversation.
That is a conversation worth having before you fall in love with a property. It is the same principle behind understanding what you actually need in cash to buy in Tennessee: the number changes based on how you are classifying the purchase.
Frequently Asked Questions
Does an Airbnb permit transfer to the new owner in Tennessee?
No. Under T.C.A. 13-7-603(a), legacy status under the Short-Term Rental Unit Act ends when the property is sold or transferred. A new owner has to qualify under the ordinance in effect at that time, in the jurisdiction where the property is located.
Can cities in Tennessee ban short term rentals?
The Short-Term Rental Unit Act limits what local governments can do to properties that already had legacy status, and T.C.A. 13-7-606 states that the Act supersedes conflicting local requirements. Cities can, however, establish permitting and application processes under T.C.A. 13-7-604, and those apply to new operators. There is also a narrow exception in the statute that applies only to the City of Brentwood.
Can an HOA prohibit short term rentals in Tennessee?
Yes. T.C.A. 13-7-605 specifically authorizes condominium associations, co-ops, homeowners associations, and similar entities to prohibit or restrict short term rental use, and allows the same through leases and recorded restrictive covenants. State preemption of local government rules does not override private covenants.
How do I find out if a specific address can be a short term rental?
Confirm which jurisdiction has zoning authority over the parcel, then contact that government's planning or codes department directly and ask about the address. Do it during your inspection period and get the answer in writing. In Wilson County, a Lebanon mailing address does not necessarily mean the property is inside city limits.
What happens if a short term rental gets code violations?
Under T.C.A. 13-7-604, if a unit has violated generally applicable local laws three or more separate times and the provider has exhausted appeal rights, the municipality may prohibit continued use as a short term rental. The burden of proving the violations is on the local government.
Should I buy a short term rental that has never had a permit?
Treat it as a house, not as a business. If the prior operation never had a permit in a jurisdiction that required one, it likely never had legacy status to begin with, and there is nothing for you to inherit either way. Price and underwrite it on what you can legally do with it after closing.
Where to Start
The short term rental question in Middle Tennessee is not really a question about the market. It is a question about a specific parcel, a specific jurisdiction, and a specific set of documents, and the answer changes across a city line.
If you are looking at an investment property in Lebanon, Mt. Juliet, Murfreesboro, or anywhere in the Nashville metro and the income model depends on short term rental use, do not take the listing description as the answer. I can help you confirm the jurisdiction, get the right questions in front of the right department, and structure the contingency so you are not obligated to close on an assumption.
None of this is legal advice, and on a purchase where the whole return depends on the regulatory answer, a real estate attorney is money well spent. Reach out and I will help you get the process started.
About Khristian Schlemmer
Khristian is a top-producing Middle Tennessee Realtor and founder of First Class Real Estate, serving buyers, sellers, and investors throughout the Greater Nashville area. With over $60 million in career sales and 200+ homes sold, he is known for creative marketing, strong negotiation, and delivering a true first-class client experience. Born into a family passionate about real estate investing and home building, Khristian combines local market expertise with modern marketing strategies to help clients confidently achieve their real estate goals.
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