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SEE EXAMPLES OF
CASES
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SECTION
5-12-010
5-12-020
5-12-030
5-12-040
5-12-050
5-12-060
5-12-070
5-12-080
5-12-081
5-12-082
5-12-090
5-12-095
5-12-100
5-12-110
5-12-120
5-12-130
5-12-140
5-12-150
5-12-160
5-12-170
5-12-180
5-12-190
5-12-200
RATES
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TITLE
Title, Purpose and scope
Exclusions
Definitions
Tenant Responsibilities
Landlord's Right of Access
Remedies for Improper Denial of Access
Landlord's Responsibility to Maintain
Security Deposits
Interest Rate on Security Deposits
Interest Rate Notification
Identification of Owner and Agents
Tenants'
Notification of Foreclosure Action
Notice of Conditions Affecting Habitability
Tenant Remedies
Subleases
Landlord Remedies
Rental Agreement
Prohibition on Retaliatory Conduct by Landlord
Prohibition on Interruption of Tenant Occupancy by Landlord
Summary of Ordinance Attached to Rental Agreement
Attorney's Fees
Rights and Remedies Under Other Laws
Severability
Chicago's Security Deposit Interest
Rates |
5-12-080
Security Deposits
This is the version of this Section
before this Section was amended on July 28, 2010 -
Click
Here to see the post-amendment version of this Section.
(a) A landlord shall hold all security deposits
received by him in a federally insured interest-bearing account in a
bank, savings and loan association or other financial institution
located in the State of Illinois. A security deposit and interest due
thereon shall continue to be the property of the tenant making such
deposit, shall not be commingled with the assets of the landlord, and
shall not be subject to the claims of any creditor of the landlord or of
the landlord's successors in interest, including a foreclosing mortgagee
or trustee in bankruptcy.
(b) Any landlord or landlord's agent who receives a
security deposit from a tenant or prospective tenant shall give said
tenant or prospective tenant at the time of receiving such security
deposit a receipt indicating the amount of such security deposit, the
name of the person receiving it and, in the case of the agent, the name
of the landlord for whom such security deposit is received, the date on
which it is received, and a description of the dwelling unit. The
receipt shall be signed by the person receiving the security deposit.
Failure to comply with this subsection shall entitle the tenant to
immediate return of security deposit.
(c) A landlord who holds a security deposit or prepaid
rent pursuant to this section shall pay
interest to the tenant accruing from the beginning date of the rental
term specified in the rental agreement at the rate determined in
accordance with Section 5-12-081. The landlord shall, within 30 days
after the end of each 12-month rental period, pay to the tenant any
interest, by cash or credit to be applied to the rent due.
(d) The landlord shall, within 45 days after the date
that the tenant vacates the dwelling unit or within seven days after the
date that the tenant provides notice of termination of the rental
agreement pursuant to Section 5-12-110(g), return to the tenant the
security deposit or any balance thereof and the required interest
thereon; provided, however, that the landlord or successor landlord may deduct from such
security deposit or interest due thereon for the following:
(1) Any unpaid rent which has not been validly
withheld or deducted pursuant to state or federal law or local
ordinance; and
(2) A reasonable amount necessary to repair any damage
caused to the premises by the tenant or any person under the tenant's
control or on the premises with the tenant's consent, reasonable wear
and tear excluded. In case of such damage, the landlord shall deliver or
mail to the last known address of the tenant within 30 days an itemized
statement of the damages allegedly caused to the premises and the
estimated or actual cost for repairing or replacing each item on that
statement, attaching copies of the paid receipts for the repair or
replacement. If estimated cost is given, the landlord shall furnish the
tenant with copies of paid receipts or a certification of actual costs
of repairs of damage if the work was performed by the landlord's
employees within 30 days from the date the statement showing estimated
cost was furnished to the tenant.
(e) In the event of a sale, lease, transfer
of ownership or control or other
direct or indirect disposition of residential real property by a landlord who has
received a security deposit or prepaid rent from a tenant, the successor
landlord of such property shall be liable to that tenant for any
security deposit, including statutory interest, or prepaid rent which
the tenant has paid to the transferor.
The successor landlord shall, within ten days from the
date of such transfer, notify the tenant who made such security deposit
by delivering or mailing to the tenant's last known address that such
security deposit was transferred to the successor landlord and that the
successor landlord is holding said security deposit. Such notice shall
also contain the successor landlord's name, business address, and
business telephone number of the successor landlord's agent, if any. The
notice shall be in writing.
The transferor shall remain jointly and severally liable
with the successor landlord to the tenant for such security deposit or
prepaid rent, unless and until such transferor transfers said security
deposit or prepaid rent to the successor landlord and provides notice,
in writing, to the tenant of such transfer of said security deposit or
prepaid rent, specifying the name, business address and business
telephone number of the successor landlord or his agent within ten days
of said transfer.
(f) If
the landlord or landlord's agent 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 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. |
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Some Chicago Security Deposit Trials
Chicago
landlords covered by the RLTO are required to handle tenant security
deposits and prepaid rent properly. This is important because many
landlords treat security deposits like their own money, making tenants
involuntary partners in landlords' bad investments. This is not
fair. Landlords often keep money from deposits and invent false
reasons for the deductions in order to cover their own losses in a
falling realty market. Or charge $2.50 per lightbulb.
A security
deposit has been defined as "money a tenant deposits with a landlord as
security for the tenant’s full and faithful performance of the lease
terms."
Starr v. Gay, 354 Ill. App. 3d 610, 613 (1st Dist. 2004).
The
Illinois Security Deposit Return
Act (765 ILCS 710) and
Interest Act (765 ILCS
715) both describe a security deposit as:
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"a security deposit from
a lessee to secure the payment of rent or to compensate for
damage to the leased property " |
The term "security deposit" is not
itself defined in the RLTO definitions section (030).
The RLTO 080 rules have been found in some
cases to apply to pet deposits, rent deposits, key deposits, "damage deposits," elevator
deposits, and any other deposits that are refundable.
Non-refundable payments and fees are not subject to these rules.
Under
080(c), landlords have to pay interest on tenant security deposits.
This should come as little surprise. The deposit is still the
tenant's money, even though the landlord holds it. Since
ancient times interest has been paid for the use of money. The
"birth of money from money" is natural.
Chicago security deposits are no exception.
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Under
080(d), landlords have to follow rules in order to legally withhold from
tenant security deposits after move-out. This
section seems to require accounting for prepaid rent just like security
deposit, according to section 110(g)(3) of the RLTO:
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"the landlord shall
return all security and all prepaid rent in accordance with
Section 5-12-080(d)" |
Finally,
under 080(e), landlords have to give tenants written notice of any
transfer in ownership of the property within 10 days of that transfer.
This section also restates Illinois state law, which holds transferor
and transferee landlords jointly-and-severally liable to the tenant for
the tenant's deposit and interest. For transfers until May 12,
2010, the transferee landlord might not be liable to the tenant for the
security deposit if the transferee landlord was a lienholder.
After May 12, 2010, this exception does not apply under the Chicago
RLTO.
080(f) is
the penalty provision that awards tenants the damages equal to two-times
the deposit amount if the landlord fails to comply with any of the above
rules.
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