Late Fees on Invoices in Tennessee
What Tennessee contractors and small businesses need to know about charging late fees, interest rates, prompt payment laws, and mechanics lien deadlines.
Max Interest Rate
10% per annum (default legal rate); 1% per month on construction
Small Claims Limit
$25,000
General Sessions Court
Mechanics Lien Deadline
90 days from completion
Tennessee Prompt Payment Act
Tennessee Prompt Pay Act, Tenn. Code Ann. § 66-34-103
Tennessee requires payment within 30 days of an approved application. Interest accrues at 1% per month on overdue construction payments.
Late fee rules for Tennessee invoices
Tennessee allows reasonable contractual late fees. The prompt pay act adds statutory interest for construction work.
Tennessee's legal interest rate is 10% per annum. Contracts may specify a different rate, and the prompt pay act provides 1% monthly on construction debts.
Important disclaimer
This page provides general information about Tennessee late fee rules. It is not legal advice. Laws change, and your specific situation may have unique factors. For disputes involving significant amounts, consult a licensed attorney in Tennessee.
Demand letters and mechanics liens in Tennessee
Tennessee requires a Notice of Non-Payment to the owner before enforcing a mechanics lien.
Mechanics lien deadline: 90 days from completion. A Notice of Non-Payment must be served within 90 days.
Sample late fee clause for Tennessee invoices
“Payment is due within the terms specified above. A late fee of 1.5% per month (10% per annum (default legal rate); 1% per month on construction maximum per Tennessee law) will be applied to all balances remaining unpaid after the due date. Pursuant to the Tennessee Prompt Pay Act (Tenn. Code Ann. § 66-34-103), the undersigned reserves all rights to pursue collection including but not limited to mechanics lien filing, small claims action (up to $25,000 in General Sessions Court), and referral to collections.”
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Start Free TrialFrequently asked questions — Tennessee
What is the maximum late fee I can charge on an invoice in Tennessee?▾
In Tennessee, Tennessee's legal interest rate is 10% per annum. Contracts may specify a different rate, and the prompt pay act provides 1% monthly on construction debts. Always disclose late fee terms in your contract or invoice before work begins.
Does Tennessee have a prompt payment act?▾
Yes. Tennessee requires payment within 30 days of an approved application. Interest accrues at 1% per month on overdue construction payments.
What is the small claims court limit in Tennessee?▾
The small claims court limit in Tennessee is $25,000. Claims are filed in General Sessions Court. You generally do not need an attorney for small claims.
How long do I have to file a mechanics lien in Tennessee?▾
In Tennessee, 90 days from completion. A Notice of Non-Payment must be served within 90 days.
Do I need to send a demand letter before filing a lien in Tennessee?▾
Tennessee requires a Notice of Non-Payment to the owner before enforcing a mechanics lien.