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Tennessee Just Changed the Rules on Noncompete Agreements. Property Management Firms Need to Pay Attention.
If you run a property management company in Tennessee, your employment contracts may no longer say what you think they say.
Tennessee has adopted a two-pronged approach to noncompete enforcement that changes how these agreements apply to employees. According to Law.com, the state put new limits and new enforcement rules in place. What worked in your contracts two years ago may not hold up today.
This matters more than most firms realize.
What the Two-Pronged Approach Means
Tennessee's new framework does two things at once. It sets clearer limits on what noncompetes can actually restrict. And it changes how courts will handle enforcement when disputes come up.
For property management companies, this creates real exposure. Many firms use noncompete clauses to protect client lists, vendor relationships, and market knowledge. Those are legitimate business interests. But overly broad agreements are now more likely to get thrown out entirely rather than revised by a judge.
That is a big shift. Before, courts would often "blue pencil" a bad clause and make it narrower. Under the new rules, a clause that goes too far may simply fail.
What Property Management Firms Should Review Right Now
We recommend looking at three things in your current employment agreements:
1. Scope of the restriction. Does your noncompete define the geographic area and the type of work being restricted? Vague language is a liability now.
2. Duration. How long does the restriction last? Longer does not mean stronger. A two-year restriction on a leasing coordinator will face more scrutiny than a shorter one tied to a senior role with real access to sensitive business information.
3. What you are actually protecting. Courts want to see a legitimate business interest. Client relationships and proprietary systems qualify. General job skills do not.
If your contracts were drafted more than two years ago, they were likely written under older assumptions. Get them reviewed by a Tennessee employment attorney before your next hire.
This Is About Building a Professional Business
We talk a lot here about property managers being undervalued. Part of fixing that is running operations that hold up under scrutiny. Sloppy contracts hurt everyone. They expose firms to litigation. They also create bad exits when good employees leave.
Strong, clear agreements protect the business and treat employees fairly. That is not a trade-off. That is good management.
If you are hiring right now, this is a good time to get your employment structure right from the start. We have written about how to hire remote property management employees and what your drug testing policy should cover. Employment law does not stand still, and neither should your contracts.
What to Do Next
Review your existing noncompete clauses against the new Tennessee framework. Flag any agreements that are broad, vague, or outdated. Then get a real attorney to sign off before you rely on them.
For a wider look at what is changing in property management law heading into 2026, see our property management law changes guide.
The firms that update now will not be scrambling later. That is the professional move.
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