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The
security deposit interest section of The Chicago Residential
Landlord Tenant Ordinance (RLTO) has been
interpreted by the Illinois Supreme
Court to impose strict-liability upon violator
landlords. Other sections of the RLTO have also been interpreted by
Illinois courts in decisions mostly favorable to renters.
Chicago renters of town-homes, apartments, condos,
and single-family homes may email
attorney
for a free
initial review of their Chicago rental situation and rights.
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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
5-12-100
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
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
(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 for more than six months 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 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 or other
direct or indirect disposition of residential real property, other than
to the holder of a lien interest in such 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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Chicago
landlords covered by the RLTO are required to handle tenant security
deposits and prepaid rent very carefully. One wrong move, and they could wind up
owing the tenant damages equal to
two-times the full security deposit
amount. This may be true even if the tenant suffers no actual
harm, and they get their whole security deposit back with interest.
These rules apply to pet deposits, rent deposits, key deposits, "damage deposits," elevator
deposits, and any other deposits that are refundable.
Non-refundable fees are not subject to these rules.
Under
080(a), the tenant's security deposit or interest earned on that deposit
cannot be put in any account with the landlord's money. The
deposit and interest must always be kept in an interest-bearing account
separate from the landlord's money. If the landlord has an
"operating fund," tenant security deposits better not be in there. The
landlord also may not be allowed to enter into certain arrangements that
subject the tenant's security deposit to the claims of the landlord's
creditors.
Under
080(b), renters must be given a receipt for their security deposit at
the same time they give the deposit. The receipt must be signed by
the landlord, and must identify the property. Usually, the LEASE
will satisfy this requirement. But only if the deposit changes
hands at the same time the tenant gets a copy of the lease signed by the
landlord. Failure to provide a perfect receipt at the proper time
entitles the tenant to double-deposit-sized damages plus immediate
return of the full security deposit.
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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But in Chicago interest doesn't just
have to get paid. It has to get paid at the correct rate, and at
the proper time. Failure by a landlord to get it just right can
mean the tenant earns interest at 200%.
Under
080(d), landlords have to follow special rules in order to legally
withhold from tenant security deposits after move-out. If the
landlord is keeping money for alleged damage or cleaning or
replacements, and does it wrong, they can again owe the tenant two-times
the full security deposit. Paid receipts also must be provided for
any work or repairs allegedly done with the deposit money.
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.
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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