Does the Memphis and Shelby County zoning code apply to Germantown or Collierville?

No. The Memphis and Shelby County Unified Development Code is the zoning code and subdivision regulation for the City of Memphis and for unincorporated Shelby County, Tennessee, exclusive of incorporated municipalities. Germantown, Collierville, Bartlett, Arlington, Lakeland and Millington are each incorporated and administer their own zoning ordinance. Germantown zoning sits in Chapter 23 of its Code of Ordinances, Collierville zoning in Chapter 151 of the Town Code, and Bartlett zoning in Title 14 of its Municipal Code. An owner in one of those towns must read that town's code, not the county UDC.

How large can an accessory dwelling unit be in Memphis, Tennessee?

Under the Memphis and Shelby County Unified Development Code, ADU size is tied to lot area rather than set as a single flat number. On lots up to 1.5 acres the unit is capped at 700 square feet or one-third of the primary dwelling's ground-floor area, whichever is smaller. On lots larger than 1.5 acres the cap rises to half the primary dwelling's ground-floor area. Because the one-third test often binds first, a 1,200 square foot house on a typical Memphis lot yields a 400 square foot cap, not 700.

How much does adding an ADU raise property taxes in Shelby County, Tennessee?

Tennessee assesses residential property at 25 percent of appraised value, and Shelby County rates are quoted per $100 of assessed value. On 70,000 dollars of added appraised value, the assessed amount is 17,500 dollars. At the 2026 Shelby County rate of 2.702382, an unincorporated parcel pays about 473 dollars a year on that improvement. Inside Memphis, where the city rate of 2.58081 stacks on the county rate, the same improvement costs about 925 dollars a year. Unincorporated parcels also pay an annual county fire fee tiered by structure square footage, which added floor area can move.

Zoning & Development · September 2, 2026

One Lot, Two Rents: What Shelby County Zoning Actually Allows on a Memphis Rental

Q: Is a second unit on the same lot a separate tenancy under Tennessee law?

Treat it as one. In Shelby County, Tennessee the Uniform Residential Landlord and Tenant Act applies, because URLTA reaches Tennessee counties above 75,000 population. That means a separate written lease, a separate security deposit accounted for on its own, and the deposit returned within 30 days after the tenancy ends and the tenant provides a written forwarding address. Tennessee does not cap deposit amounts. Much of rural Fayette County, Tennessee falls below the URLTA population threshold, so the same statutory provisions cannot be assumed there. This is general information, not legal advice.

The cheapest door you will ever add to a portfolio is the one on land you already own. No acquisition, no closing costs, no competing offer. But whether that door is legal depends on a question most owners never think to ask — which code governs your parcel — and in Shelby County, Tennessee the answer changes at the city line.

First, find out whose rulebook you are under

This is the step that ends most accessory-dwelling-unit projects before they start, and it takes about four minutes.

The Memphis and Shelby County Unified Development Code is the zoning code and subdivision regulation for the City of Memphis and for unincorporated Shelby County — and, by its own terms, it applies to land within that jurisdiction exclusive of incorporated municipalities. Shelby County contains six other incorporated towns, and every one of them runs its own zoning ordinance: Germantown, TN in Chapter 23 of its Code of Ordinances, Collierville, TN in Chapter 151 of the Town Code, Bartlett, TN in Title 14 of its Municipal Code, plus Arlington and Lakeland in northeast Shelby County and Millington to the north.

So an owner reading a national article about "Memphis ADU rules" and applying it to a Collierville address is reading the wrong document. Same county, same assessor, same school-funding debates — different land-use law. And the distinction is not academic: unincorporated parcels in eastern Shelby County near Eads, and the Fayette County side of the line, sit under a third set of rules again.

Your parcel does not care what the county allows. It cares what the jurisdiction it sits inside allows, and in Shelby County that is seven different answers.

Size is a ratio, not a number

Under the UDC, ADU size keys off lot area rather than a flat cap. On lots up to 1.5 acres the unit is limited to 700 square feet or one-third of the primary dwelling's ground-floor area, whichever is smaller; above 1.5 acres the ceiling rises to half the primary dwelling's ground-floor area. The trap is that the one-third test almost always binds first on a city lot. A 1,200-square-foot ranch in Memphis, Tennessee yields a 400-square-foot cap — not 700. Run both calculations before you pay anyone for drawings.

Setbacks, easements and parking follow the underlying district, and they vary. The UDC does not impose a blanket owner-occupancy requirement, which is the provision that kills investor ADUs in a lot of other metros — but overlays and conditional-use conditions can layer requirements a general code reading will miss. Confirm the classification for your specific address with the Memphis and Shelby County Division of Planning & Development before you commit capital.

The code is being rewritten while you read this

This matters more than usual right now. DPD is in the middle of a full UDC rewrite aligned to the Memphis 3.0 comprehensive plan. A draft zoning map went out February 13, 2026, the first complete public review draft of the code text followed on March 27, 2026, and Draft 2 of the zoning map landed April 15, 2026. The draft cuts the code's word count by roughly 45%.

Two practical consequences. Anything you read about Memphis zoning that predates March 2026 is describing a code that is actively being replaced — and any assumption you carry into a five-year hold should be checked against the draft map, not just today's map, because your district label may change.

The tax math, worked

Tennessee assesses residential property at 25% of appraised value, and Shelby County rates are quoted per $100 of assessed value. Say a finished ADU adds $70,000 to the appraised value of the parcel. Assessed value on the improvement is $17,500, or 175 rate-units.

On an unincorporated Shelby County parcel paying the county rate only — 2.702382 for 2026 — that improvement carries about $473 a year. Inside Memphis, where the city rate of 2.58081 stacks on top of the county rate for a combined 5.283192, the identical structure carries about $925 a year. Germantown, TN comes in near $785 and Collierville near $756 on the same math. The Memphis-versus-unincorporated spread on one ADU is roughly $452 a year, every year you own it — the same city-line effect covered in our Shelby County property tax post. One wrinkle specific to unincorporated parcels: they also pay an annual county fire fee tiered by structure square footage, and new floor area can move you up a tier.

County taxes are due the first Monday of October, payable through the last day of February, and delinquent March 1 with interest accruing monthly on the base tax.

Two units, two of everything else

An ADU is not a bedroom. It is a second tenancy, and the operating consequences run deeper than the construction budget.

On the legal side, Shelby County sits above the 75,000-population threshold that triggers Tennessee's Uniform Residential Landlord and Tenant Act, so the second unit gets its own written lease and its own security deposit, accounted for separately and returned within 30 days after the tenancy ends and the tenant supplies a written forwarding address. Tennessee does not cap deposit amounts. Much of rural Fayette County, Tennessee falls below that population threshold, so do not assume URLTA travels with you across the county line — the split we walked through in the two-counties deposit post.

On the insurance side, carriers generally rate an ADU rental as a free-standing dwelling rather than as part of the main house, which can mean two separate policies on one parcel with separate limits for structure, loss of rent and tenant liability — even where the units share utilities. Ask your carrier how they will rate it before you build, not at renewal.

And on financing: Freddie Mac's Primary Mortgage Market Survey release dated August 27, 2026 put the 30-year fixed at 6.66%, against 6.65% the prior week and 6.56% a year earlier. That is the well-qualified owner-occupant benchmark; investor money prices above it on both rate and down payment, and construction or home-equity financing on an ADU is its own conversation again.

Disclosure: Homefront is the management company. Matt is separately a licensed REALTOR® with Reid Realtors, LLC and is paid a commission if you buy or sell a property through him — that is a different transaction from any management engagement, and using one has never required using the other.

Before you spend a dollar

Confirm which jurisdiction your parcel is in — Memphis, unincorporated Shelby County, or one of the six suburbs — and pull that jurisdiction's code, not a generic one. Run the one-third calculation against your actual ground-floor area. Check the parcel against the current zoning map and the 2026 draft. Ask DPD or your town's planning office about setbacks, parking and any overlay before you order drawings, and read your HOA covenants, which can prohibit what zoning permits. Then price the carry: the tax on the improvement, the second insurance policy, and the second turn.

Our team underwrites second-unit potential the same way we underwrite the first — on what it actually rents for and what it actually costs to carry. Management fees never exceed 10% of monthly rent, with a customized schedule as your portfolio grows and no hidden charges, and tenant screening is paid by the applicant; the detail is in our fee guide. Send us the address for a free rent analysis and we will tell you what a second door on that lot would realistically earn.

Sources & further reading: Memphis & Shelby County Division of Planning and Development — Unified Development Code, The Memphis and Shelby County Unified Development Code (current text), City of Memphis & Shelby County UDC Update project site, City of Germantown, TN Code of Ordinances Chapter 23 — Zoning, Town of Collierville, TN — Regulations & Land Use Policies, City of Bartlett, TN Zoning Ordinance, Steadily — ADU housing laws and regulations in Memphis, TN (size caps and insurance treatment), Shelby County Trustee — Shelby County Tax Rates, Shelby County Trustee — City of Memphis Tax Rates, Freddie Mac Primary Mortgage Market Survey, release dated August 27, 2026. Zoning and tax provisions verified September 2026 and subject to change — the UDC in particular is mid-rewrite. This article is general information about property operations, zoning and taxation, not legal or tax advice; confirm any specific parcel with the governing planning office and consult a Tennessee attorney or CPA.