Chicago Tenant Rights FAQ

What are Chicago Tenant Rights?

Renters in the City of Chicago are protected by the Residential Landlord and Tenant Ordinance (RLTO). Chicago tenant rights are a particular set of laws that protect the rights of renters and landlords. Whether you need to break a lease, are seeking a return of your security deposit, are involved in litigation with your landlord or your landlord is in foreclosure, it is important that you are familiar with the laws and ordinances concerning your case.

2014 Chicago Security Deposit Interest Rate

Chicago 2014 Security Deposit Interest Rate
Chicago 2014 Security Deposit Interest Rate

Chapter 5-12 of the Municipal Code of Chicago hereby gives notice pursuant to Sections 5-12-081 and 5-12-082 of the Municipal Code of Chicago that the rate of interest on security deposits under rental agreements from Jan. 1, 2014 through Dec. 31, 2014, shall be:

You should have also received this Chicago RLTO Summary with a Chicago city emblem. If not, please contact us for immediate consultation.

This rate is based on the average of the rates of interest, as of Dec. 31, 2013, of the following types of accounts at Chase Bank, which is the commercial bank having the most branches located in the City of Chicago: Savings Account 0.01 percent; Insured Money Market 0.01 percent; and Six-month Certificate of Deposit (based on a deposit of $1,000) 0.02 percent.

A landlord must give a tenant a receipt for a security deposit that includes the owner's name, the date it was received and a description of the dwelling unit.

The receipt must be signed by the person accepting the security deposit.

A landlord must pay interest each year on security deposits and prepaid rent held more than six months.

The rate of interest that a landlord must pay is set each year by the City Comptroller. Before a landlord can deduct expenses for damages from the security deposit, the landlord must provide the tenant with an itemized statement of the damages within 30 days of the date the tenant vacates the dwelling unit.

Within 45 days of the date the tenant vacates the dwelling unit, a landlord must return all security deposit and required interest, if any, minus unpaid rent and expenses for damages. In the event of fire, a landlord must return all security deposit and required interest, if any, minus unpaid rent and expenses for damages.

Chicago Tenants Bill of Rights

The RLTO is Chicago's Landlord-Tenant "Constitution"

The "Bill of Rights" is the collective name for the first ten (10) amendments to the United States Constitution.

Chicago's renters have often times referred to the Chicago Residential Landlord and Tenant Ordinance as a "Bill of Rights" because the Chicago law:

"applies to, regulates and determines rights, obligations and remedies under every rental agreement for a dwelling unit located within the City of Chicago, regardless of where the agreement is made, subject only to the limitations contained in Section 5-12-020. This chapter applies specifically to rental agreements for dwelling units operated under subsidy programs of agencies of the United States and/or the State of Illinois, including specifically programs operated or subsidized by the Chicago Housing Authority and/or the Illinois Housing Development Authority to the extent that this chapter is not in direct conflict with statutory or regulatory provisions governing such programs." RLTO Section 5-12-010.

The RLTO and Constitution are living, breathing, real documents. Period.  The rights that are given to renters by the Chicago RLTO are unparalleled by any city in the country - and in the world.

 

Stop Illegal Evictions!

Illinois or Chicago Landlords cannot simply evict someone from their dwelling units whether it be a single family home, a condo, a coach-house, a renter that has not paid rent, a renter that has violated the lease or law, or a family member.  This is called unlawful "self-help" by Landlords. 

Chicago Tenants Rights - Changing or Rekeying Locks

DID YOU KNOW:  If a lessor or landlord in Illinois does not change or rekey the unit's lock before the day the new tenant or lessee takes possession, and a THEFT occurs at that dwelling unit that is attributable to the lessor's failure to change or rekey the lock, the landlord is liable for any damages from the theft that occurs as a result of the lessor's failure to comply with the law.

Chicago Tenants Rights are protected in Bankruptcy

What happens to a Chicago Tenant's security deposit when a Chicago Landlord files for Chapter 7 Bankruptcy Protection?

Security deposits paid by Chicago's tenants are not dischargeable in Chapter 7 Bankruptcy proceedings.

In Re Bertha McGee, 353 F.3d 538 (December 23, 2003) before the United States Court of Appeals, Seventh Circuit is the dispositive case on this important issue.  The Appellate Judge panel included  Chief Judge Frank Easterbrook, Judge Diane Wood, and Judge William Bauer of the Seventh Circuit.

These federal judges held the following:  That improper withdrawal and misuse of tenant's security deposit amounted to "defalcation while acting in a fiduciary capacity" under the Federal Bankruptcy Code, 11 U.S.C. § 523(a)(4).

As stated by Judge, Easterbrook, "Segregation of funds, management by financial intermediaries, and recognition that the entity in control of the assets has at most "bare" legal title to them, are hallmarks of the trust. These real attributes...bring into play a fiduciary obligation and thus § 523(a)(4).  The ordinance [Chicago RLTO] charges landlords with duties to be carried out on behalf of tenants, to protect their entitlement to return of deposits with interest if they keep their part of the bargains." Id at 540-541.

In the event you or anyone you know is nervous or seems to be in a similar situation regarding Chicago tenants rights in bankruptcy, do not hesitate to contact an attorney to review your situation for you. Click here or call 312-924-0278 to contact us today.

Pet Security Deposits Have Rights (Too!)

Don't You Just Love Pets?

On April 16, 2013, Circuit Court of Cook County Judge, Joyce Marie Murphy Gorman, held that a Landlord's failure to return a refundable pet security deposit and interest violated the Chicago Residential Landlord Tenant Ordinance.  Tenant brought suit under the Chicago RLTO for statutory penalties resulting from Landlord's failure to return $500.00 which was deemed a pet security deposit.  The Landlord in this case simply "forgot" to return the $500.00 pet security deposit and interest, and this was never in dispute.

Despite attempts at settlement, the parties were unable to resolve the matter and went to trial.  The next day, judgment was entered in favor of the Tenant for $4,500.00 which included $500.00 (i.e. the return of her full pet security deposit) plus $4,000.00 or two (2) times the amount of her "security deposit" (i.e. her apartment security deposit portion was $1,500.00) pursuant to the strict language of the Chicago RLTO law Section 5-12-080(f).

Pursuant to RLTO Section 5-12-080(f)(1):

“Subject to subsection (f)(2), if the landlord fails to comply with any provision of Section 5-12-080(a) – (e), the tenant shall be awarded damages in an amount equal to two (2) times the security deposit plus interest at a rate determined in accordance with Section 5-12-081. This subsection does not preclude the tenant from recovering other damages to which he may be entitled under this chapter.”

The Illinois Supreme Court in Lawrence v. Regent Realty (2003), expressly upheld the 2x security deposit penalty under the Chicago RLTO for the following reason:

“[The Landlord's] violation of the ordinance’s interest requirements may have been the product of poor judgment, as the trial court believed, is of no consequence. Nothing in section 5-12-080(f) requires proof that the landlord’s actions were knowing or willful. A landlord’s duty to comply with the statute is absolute. If a landlord requires a security deposit, the landlord is required to pay the tenant interest on that deposit. If he fails to do so, he is liable to the tenant for the damages specified in the ordinance. There are no exceptions. Where a statute is clear and unambiguous, as this one is, the court should not look to extrinsic aids for construction…The statute must be enforced as written, and a court may not depart from its plain language by reading into it exceptions, limitations, or conditions not expressed by the legislature.”

Plaintiff's Attorney, Aaron Krolik, stated that "Judge Gorman made the correct ruling today and correctly applied the Illinois Supreme Court's holding in Lawrence v. Regent Realty from 10 years ago.  A security deposit should include any refundable deposits or monies paid by tenants to landlords related to the use and occupancy of their apartments under the Chicago Residential Landlord Tenant Ordinance.  This necessarily includes refundable pet security deposits." Aaron Krolik Law Office P.C. has represented hundreds of Chicago tenants since 2004 and owns the user-friendly Web Site, www.securitydepositlaw.com. Now, the Landlord gets to pay Aaron Krolik's reasonable attorneys fees and costs as provided under RLTO Section 5-12-180 and  a hearing on fees is set for end of May 2013.

WHERE is your Chicago Security Deposit Held?

Is the Name and Location of the Security Deposit Account in the Rental Agreement?  If Not, This Violates The Law.

All Chicago renters who have signed ANY rental agreement or renewal lease as of August 28th, 2010, need to take careful note of a recent amendment to the Chicago Residential Landlord and Tenant Ordinance (also commonly known as the Chicago "RLTO").

The Chicago City Council has now added Chicago RLTO Section 5-12-080(a)(3), which states that a landlord shall disclose in the parties' rental agreement the bank name and address where a tenant's security deposit is going to be deposited and held for the duration of the tenancy.  If a Landlord fails to comply with this requirement, the penalty is two (2) times the security deposit - end of story.

Pursuant to RLTO Section 5-12-080(f)(1):

"Subject to subsection (f)(2), if the landlord fails to comply with any provision of Section 5-12-080(a) – (e), the tenant shall be awarded damages in an amount equal to two (2) times the security deposit plus interest at a rate determined in accordance with Section 5-12-081. This subsection does not preclude the tenant from recovering other damages to which he may be entitled under this chapter."

The Illinois Supreme Court in Lawrence v. Regent Realty (2003), expressly upheld the 2x security deposit penalty under the Chicago RLTO for the following reason:

"[The Landlord's] violation of the ordinance's interest requirements may have been the product of poor judgment, as the trial court believed, is of no consequence. Nothing in section 5-12-080(f) requires proof that the landlord's actions were knowing or willful. A landlord's duty to comply with the statute is absolute. If a landlord requires a security deposit, the landlord is required to pay the tenant interest on that deposit. If he fails to do so, he is liable to the tenant for the damages specified in the ordinance. There are no exceptions. Where a statute is clear and unambiguous, as this one is, the court should not look to extrinsic aids for construction...The statute must be enforced as written, and a court may not depart from its plain language by reading into it exceptions, limitations, or conditions not expressed by the legislature."

Based on the Supreme Court's ruling in Lawrence and the policy of protection of renters rights, all Chicago renters should review his or her full rental agreement.

"These changes to the RLTO drastically change the lease requirements by landlords and the rights of renters living here in Chicago," says Aaron Krolik, a Chicago attorney with a concentration in tenant-landlord rental law disputes and owner of www.securitydepositlaw.com.  "With the recent increase in renters, the City has strengthened tenant rights in Chicago. I am urging renters to call me if they have signed a lease that failed to contain the bank name and location where the security deposit is being held."

"These laws are not going anywhere and it is wise of both renters and landlords to understand the intricate details of compliant lease documentation," adds Krolik.  For more information on Aaron Krolik's law firm visit www.securitydepositlaw.com.

Click Here To See Original Press Release from June 2011.

Chicago Security Deposit Interest Rates

Why is Security Deposit Interest Important?

The 2013 interest rate on Chicago security deposits is .023% and the previous two (2) years rates are .057% and .073 for 2012 and 2011 respectively (The City of Chicago Web Site has the Chicago interest rates dating back to 1997).

Here is a chart for the preceding years:

Chicago & Illinois Security Deposit Interest Rates
Chicago & Illinois Security Deposit Interest Rates

Yes, the interest earned is nominal, but this does not matter in assessing whether or not a Landlord is liable to the Tenant for a penalty of two (2) times the security deposit under RLTO Section 5-12-080(f)(1) for failing to timely pay interest and/or the correct amount.  The RLTO clearly supports Tenants timely receiving security deposit interest.

As stated by the Illinois Supreme Court in Lawrence v. Regent Realty, 754 N.E.2d 334, 340-341 (Ill. 2001):

“The purpose of the law [Chicago RLTO] is to help protect the rights of tenants with respect to their security deposits, including the right to receive interest. In most cases, the amount of interest landlords owe for security deposits is small, too small to warrant litigation against a landlord who refuses to abide by the law. Without the prospect of liability for significant additional damages, landlords would therefore have little incentive to meet their statutory obligations. They could withhold the interest payments with impunity. And many do. A study cited by plaintiff and presented to the circuit court showed that failure of landlords to pay interest on security deposits is a pervasive problem in the City of Chicago.  The city council has elected to address this problem by imposing an absolute duty on landlords to pay the interest they owe and conferring on tenants the right to recover double the amount of their security deposits when that duty is breached.  While one may personally disagree with the wisdom of this choice, it is not this court's function to second-guess the city council's judgment in such matters. As our decisions have made clear, responsibility for the wisdom or justice of legislation rests with the legislature. Under our system of government, courts may not rewrite statutes to make them consistent with their own ideas of orderliness and public policy.” (emphasis added).

Chicago Security Deposits

Chicago Security Deposits Are Protected - Know Your Rights

Chicago RLTO Sections 5-12-080(a)-(e) mandate that Chicago landlords maintain security deposits in a segregated interest-bearing account, pay security deposit interest annually, give paid receipts (not invoices) for any security deposit deductions, and disclose the bank name and location where the security deposit is being held in the lease.  If a Chicago landlord fails to comply with the numerous guidelines of Chicago RLTO Section 5-12-080, including the ones just mentioned, a Chicago tenant shall be awarded damages equal to two (2) times the amount of the full security deposit (including refundable key, pet, and parking security deposits) plus reasonable attorneys fees and costs.  As ridiculous as this may seem, the Illinois Supreme Court's decision in Lawrence v. Regent Realty Group (2003) confirms that a landlord need not acted willfully to have been found in violation of Section 5-12-080 and thus liable to the tenant for two (2) times the amount of security deposit.  In other words, this security deposit law in Chicago equates to strict liability.  Again, please contact us if you are still in continued disbelief, have a security deposit question, or a security deposit dispute.

As a side note, Chicago RLTO Section 5-12-080(a) prohibits the "commingling" of security deposits with "assets" of Chicago Landlords.  In other words, Chicago tenants' security deposits shall "continue" to be the tenant's property, and must be maintained in a separate, interest-bearing account (located in the State of Illinois). These are strict mandates; and are often times violated by Chicago landlords.  How do you find out if your Landlord commingled your security deposit?  Simply request the front and back bank images of your security deposit payment from your Bank (this information is sometimes easily located online and you can print the images).  Is it really worth the effort though? Short answer, yes.