"Move-In Fees" Are Not "Security Deposits"

The First District Court of Appeals in Illinois recently held that a "a non-refundable move-in fee" is not a "security deposit" under Chicago RLTO Section 5-12-080. Steenes vs. MAC Property Mgmt., 16 N.E.3d 243 (1st. District , 3rd Division, July 23, 2014).

¶ 20 "The RLTO does not define the term 'security deposit.' Therefore, we may look to the ordinary and popularly understood meaning given to the term "security deposit" (see Alvarez v. Pappas, 229 Ill.2d 217, 228, 321 Ill.Dec. 712, 890 N.E.2d 434 (2008)) and, in that regard, we may consult a dictionary. See Relf v. Shatayeva, 2013 IL 114925, ¶ 32, 375 Ill.Dec. 726, 998 N.E.2d 18. We may also consider the "reason behind and the necessity for the ordinance." VG Marina Management Corp. v. Wiener, 378 Ill.App.3d 887, 890, 317 Ill.Dec. 622, 882 N.E.2d 196 (2008).

¶ 21 We have previously described a security deposit as:

"[M]oney a tenant deposits with a landlord as security for the tenant's full and faithful performance of the lease terms. [Citation.] Under the terms of a lease agreement, a security deposit remains the tenant's property which the landlord holds in `trust' for the tenant's benefit subject to the tenant fulfilling its obligations under the lease." Starr v. Gay, 354 Ill.App.3d 610, 613, 290 Ill.Dec. 807, 822 N.E.2d 89 (2004).

Similarly, the Illinois Security Deposit Return Act (765 ILCS 710/1 (West 2008)), and the Illinois Security Deposit Interest Act (765 ILCS 715/1 (West 2008)), both describe a security deposit as monies deposited from a lessee to secure the payment of rent or for compensation for damage to property. Additionally, "security" *249 is defined as "something given, deposited, or pledged to make certain the fulfillment of an obligation (as the payment of a debt)." Webster's Third New International Dictionary 2053-54 (1976). A "deposit" is defined as: "Money placed with a person as earnest money or security for the performance of a contract." Black's Law Dictionary 450 (7th ed. 1999). In contrast, a "fee" is defined as "[a] charge for labor or services, esp[ecially] professional services." Black's Law Dictionary 629 (7th ed. 1999).

¶ 22 Plaintiff argues the move-in fee must be a security deposit because there was no security deposit amount listed in the lease, but the lease had a provision stating a security deposit had been made, and because the move-in fee was illusory and without consideration. Plaintiff's arguments and the general conclusory allegations of the amended complaint are insufficient to state her claim under the RLTO that the move-in fee was a security deposit

¶ 31 We agree with defendants that Kopp and Stauffer make clear that nonrefundable fees are not contrary to the Ohio Landlord-Tenant Act and, where the lease indicates such fees are not sought to secure a tenant's performance, they are not considered security deposits. These cases support our conclusion the move-in fee, a one-time upfront charge relating to plaintiff's move into her apartment, which plaintiff paid with full knowledge that it was nonrefundable, was not a security deposit. (emphasis added).