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CHICAGO RLTO: Recent History & Current Practice. - THIS IS NOT LEGAL ADVICE -
In July, 2001 the Illinois Supreme Court said landlords covered by the Chicago Residential Landlord and Tenant Ordinance (RLTO) may owe tenants two-times their security deposit, plus costs and attorney fees, if the landlord innocently fails to pay interest on the deposit every 12 months. The court said "there are no exceptions." Lawrence v. Regent Realty Group, Inc., 197 Ill. 2d 1, 9-10 (2001). Also, the court awarded automatic damages of $100 for the landlord's failure to attach a summary of the RLTO to each of the tenant's lease renewals. Since 2001 the Lawrence decision has lent credibility to claims brought under the RLTO in Chicago.
Even before the Supreme Court got involved, the Illinois Court of Appeals had affirmed that tenants were entitled to damages equal to two-times their full security deposit just for harmless commingling, a violation of RLTO section 080(a). Commingling was described by the court in 1996 as simply depositing part of a tenant's security deposit increase into the same bank account that the landlord put rent payments in. Plambeck v. Greystone Mgmt. & Columbia Nat'l Trust Co., 281 Ill. App. 3d 260, 272 (1st Dist. 1996). The Plambeck court also decided that, even if only part of a security deposit was commingled, the tenant was entitled to damages equal to two-times their full security deposit.
The Court of Appeals had also held in 1993 that damages equal to two-times their security deposit means new money, and does not include the security deposit itself. Solomon v. American Nat'l Bank & Trust Co., 243 Ill. App. 3d 132, 137 (1st Dist. 1993). Tenants do not waive their right to the double-deposit-sized damages by cashing a security deposit refund check issued by the landlord, unless the check clearly says it is settlement of all issues arising out of the tenancy under the RLTO, according to Solomon.
Until June 15, 2006, Chicago tenants were able sometimes to recover damages equal to two-times their security deposit for each individual violation of RLTO section 080(a), (b), (c), (d), and (e). For example, many landlords covered by the RLTO in Chicago may commingle a tenant's security deposit, fail to give a proper receipt for the security deposit, and also fail to pay interest. That landlord would have violated RLTO subsections 080(a), (b), and (c). Under RLTO section 080(f):
Landlords' best, and often only defense was the short two-year statute of limitations imposed on tenants seeking damages equal to two-times their security deposits. See Namur v. Habitat Co., 294 Ill. App. 3d 1007, 1010-1011 (1st Dist. 1998); Sternic v. Hunter Props., Inc., 344 Ill. App. 3d 915, 918-919 (1st Dist. 2003). If a landlord was lucky, their tenants wouldn't figure out their rights until it was too late. Pages like this are intended to alert tenants before their rights expire.
Chicago apartment companies were sued in class action lawsuits that recovered large sums of money to compensate tenants (and their lawyers) for technical security deposit violations. In response, some of the largest and best-advised apartment management companies stopped taking security deposits altogether. Other landlords switched to "non-refundable move-in fees" to replace security deposits. Still, most of Chicago's rental housing continues to require security deposits. Some landlords have simply done their best to handle security deposits legally. This is a risky proposition. With the stakes so high, and the liability so strict, Illinois lawyers are certain to find some way a landlord failed to comply with RLTO § 080(a)-(e).
Chicago landlords of course cannot stand the RLTO. They view the RLTO only as a form of state-imposed wealth redistribution; an involuntary lottery. Chicago landlords are small business owners and investors, and they watch their bottom line closely and carefully. Chicago landlords say the RLTO preys unfairly upon "loopholes" and "trap doors." Chicago tenants say "landlords have all kinds of lawyer to evict us; why not to counsel them on well-publicized local law?" Chicago landlords have a champion in Justice Freeman of the Illinois Supreme Court. He dissented from the majority opinion in Lawrence. He said:
A concerted effort has always been made by landlords to change the RLTO. In 2002 Alderman Bernard Stone of the 50th Ward introduced an amendment to the RLTO that would limit the liability of landlords to situations where their conduct was in bad faith. The amendment never passed. Two years later in 2004 Alderman Tom Tunney of the 44th Ward sought to amend the security deposit section. His amendment would have required tenants to mail their landlord a letter asking for the interest. Then, only if the landlord didn't pay interest after the tenant's letter, the tenant became entitled to $25. Alderman Tunney's amendment would have also exempted landlords from existing liability under the RLTO for their past violations! This amendment never passed either. Both amendments were opposed by Mayor Daley's office and the Chicago Department of Housing.
Still, on June 15, 2006 landlords got some relief. The Illinois Court of Appeals
published its decision
in
Krawczyk v. Livaditis, 366 Ill. App. 3d
375, 378 (1st Dist. 2006), which said:
Today, in 2007 and 2008, Chicago RLTO attorneys for tenants have to be more creative. A $450 security deposit, even doubled, isn't much to go to court over. What's more, many landlords have successfully insulated themselves against lawsuits under RLTO § 080 by abandoning security deposits altogether.
Tenants' attorneys need to expand their investigation of the rental property and the documents associated with the tenancy. If the Krawczyk case closed one door, it opened another. The court confirmed that separate damage awards can still be stacked between sections of the RLTO, just not within section 080 of the RLTO. A tenant can still recover large damage awards plus costs and attorney fees even without a security deposit under the Ordinance. For example, a tenant could recover damages equal to (1) one-month's rent for non-disclosed code violations (RLTO § 100), (2) another two-months' rent for attempted enforcement of an illegal late fee (RLTO § 140), (3) another one-month's rent for entry to show the rental unit to prospective renters without giving at least two-days' advance notice (RLTO § 050), and another $100 for failure to attach a summary of the RLTO to the lease (RLTO § 170). That's four-months' rent plus $100 plus court costs and attorney fees. Tenants lawyers may have to work harder, but the money is still there.
The fastest growing population of Chicago tenants with strong RLTO cases are condo renters. Chicago condo owners who rent out one or two condo units in Chicago are reliable violators of the RLTO. These condo landlords predictably ignore or misread the RLTO and commit obvious violations. They also extract giant security deposits. A common misconception amongst Chicago condo landlords is that, because the Illinois Security Deposit Acts do not apply to them, nothing does.
Other Chicago tenants with strong RLTO cases are renting apartments and houses from landlords who know about the Ordinance, but try to figure it out themselves. They print a lease off the internet and figure "Robert Shapiro got OJ off the hook. Why not me?" There are a lot of reasons why not. Chicago landlords of any property are advised to consult a competent Illinois lawyer versed in the RLTO, Illinois, and federal rental laws for review of their rental plans and policies. It's cheaper than paying a tenant's lawyer to sue them later.
It is important for landlords to remember that, even if the tenant only recovers $100 under the RLTO, the tenant's attorney will still be awarded their "reasonable" attorney fee. According to the Court of Appeals, the tenant's attorney is allowed to recover a fee against the landlord that exceeds the amount awarded to the tenant. Pitts v. Holt, 304 Ill. App. 3d 871-875 (1st Dist. 1999). In their words:
Once the RLTO is invoked, there is no case too small.
This internet site is maintained by an Illinois attorney dedicated to getting Chicago tenants their money back fast. Even for tenants in Chicago without security deposits, Chicago tenants' lawyers can find ways recover damages equal to one-month's rent, two-months' rent, or both. Or the written lease can be broken early, without penalty. These damages and remedies can be stacked on top of double-deposit-sized awards for security deposit violations. Tenants in Chicago still can get some satisfaction from bad landlords.
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