Security Deposit Law





     In this case the the tenants rented an apartment in Chicago.  The tenants gave a $1,200 security deposit.  The landlords filed an eviction action after tenants paid their June rent late.  The landlords claimed to have never gotten that check.  We entered our appearance and filed a counterclaim for three alleged violations of the RLTO.


     We got the eviction dismissed, and the Court proceeded to rule on the tenants' counterclaims.  We won $100 for one violation, but the Trial Court rejected our claim that the landlord (1) retaliated and (2) unlawfully mortgaged the tenant's security deposit.  We made up number (2).


     The tenants appealed.


     The Appellate Court affirmed the award of $100:



     We lost again on the retaliatory eviction claim.  But the appellate court reversed the trial court's ruling against the tenant's "mortgaged deposit" counterclaim.  Thus, the tenants were awarded damages under RLTO 080(f) equal to two times the $1,200 security deposit; or $2,400, because the landlords violated RLTO 080(a) by subjecting the tenants' security deposit to the claims of the landlords' creditor; as collateral in their mortgage.  Tenants were also awarded costs and attorney fees.

     The result in this case was consistent with the Supreme Court's opinion in Lawrence v. Regent Realty Group, Inc., 197 Ill. 2d 1 (2001) that:

  "The purpose of the law is to help protect the rights of tenants with respect to their security deposits..."

     The assessment of a penalty against landlords for mortgaging tenant security deposits is the only way to convince landlords not to mortgage tenant security deposits in Chicago.  Especially these days, too many tenants are losing their security deposits due to their landlords' financial irresponsibility.  There is no bailout for tenants.

     This order from the appellate court is unpublished pursuant to Illinois Supreme Court Rule 23, and so is not precedent.  Also, the Landlord filed a petition for rehearing last year that has never been decided.  But it is still interesting reading.

ORDER  Following a bench trial, the court dismissed the complaint filed by the plaintiffs *** (landlords), who had sought possession of and rent due on an apartment rented by defendants *** (tenants).  The court also ruled against tenants on two of their counterclaims.

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The plain language of section 5-12-080(e) of the RLTO shows that a holder of a lien interest in property is not liable to tenants for their security deposits.  Here, the record shows that Countrywide held a lien interest in landlord's property, and thus Countrywide did not have any responsibility to tenants for their security deposit.  Landlords thus violated section 5-12-080(a) of the RLTO because they subjected tenants' security deposit to a creditor of landlords, which is precisely what that section forbids.

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For the foregoing reasons, this cause is reversed and remanded to the trial court with instructions to vacate the judgment in favor of landlords as to count II of tenants' counterclaim, and enter judgment for tenants for double the amount of the deposit plus interest.  The court should then conduct a hearing on attorney fees consistent with Plambeck v. Greystone Management & Columbia National Trust Company, 281 Ill. App. 3d 260, 273 (1996).  The cause is affirmed in all other respects.





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