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:
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).