The Interest Act only awards a tenant damages equal to their whole security deposit if a landlord's failure to pay the interest required by the act is a *willful failure or refusal. 

* so what's a willful failure?

 

     Suppose your past or current landlord owns a rental property with 25 or more units, and you are a good tenant who doesn't default on your lease.  You paid your landlord a security deposit or pet deposit, which you understood was to be returned to you if you didn't damage the apartment.  Thirteen (13) or more months go by from the date your lease starts, and your landlord doesn't pay you interest, in cash or rent-credit, on your security deposit.  Your landlord just failed to pay the interest required by 765 ILCS 715/2.  But was it a willful failure or refusal?

 

     Whether a landlord "willfully fails or refuses" to pay the interest required is a question of fact that the judge will decide.  The "willfully" language makes the outcome of every Interest Act suit uncertain.  The best that can be done is to argue, which is why there are lawyers.

 

     The law on this subject is unsettled in Illinois, and the following analysis is merely this Illinois attorney's opinion.

 

     Courts in Illinois read statutes with the goal of applying them as written.  However, when the meaning of a statute's language could reasonably be interpreted in more than one way, courts rely on certain rules for interpretation.  These rules purportedly result in achieving the intent of the legislature, while staying within the language.  These rules are the ammunition in battles over the meaning of "willfully fails or refuses."

 

     One rule of interpretation is that no word in a statute should be left meaningless by an interpretation.  That means that "willfully" has to have some meaning in the statute, and that a landlord merely failing to pay the interest required cannot in all cases automatically result in an award to the tenant.  This is bad news for the tenant.  Hardly any tenants ask their landlord for the interest owed them every year.  The sued landlord will argue:

 
 

"The tenant never asked for their interest, and I didn't know I had to pay it every year.  So I couldn't have willfully broken the law, 'cause I didn't know or understand that crazy law.  It's just a few bucks anyways." 

 

     Some judges will buy it, and if you don't have an argument ready, your case might be over.  Fortunately, there are several arguments in favor of penalizing a landlord who wasn't asked to pay interest by the tenant and who claims they didn't know about the law.

 

     First, the same rule that says no word in a statute should be rendered meaningless also dictates that there must be some meaningful difference intended between a willful failure and a refusal.  The statute imposes liability for either, since the word "or" is used between them.  Thus, the legislature clearly did not intend a tenant to have to ask for interest on their deposit, because a landlord's failure to pay interest after being asked would be a refusal, and not just a failure.  The legislature clearly meant to impose liability for a landlord who fails to pay interest without being asked to pay it.

 

     Having disposed of the landlord's first argument, that the tenant never asked for interest, the matter of what a "willful" failure is remains.  It is this lawyer's opinion that the only way a landlord can fail to pay the interest without it being willful is if the landlord had the will to succeed in making the payment required by the statute.  Some hypothetical examples illustrate the difference between penalizing landlords for all failures and penalizing landlords only for willful failures.

 

     1)  If a landlord writes the interest check for the tenant and puts it in a properly addressed envelope and, within 30 days after the first 12 months of the tenant's lease is driving it to the post office to be mailed to the tenant, but has an accident along the way which prevents the check from being mailed or received by the tenant in time, this is not a willful failure.  The landlord had the will to succeed in paying the interest required by the statute, and so should not be penalized despite actually failing to pay the interest as required.

 

     2)  If a landlord writes the check and mails it to the tenant within the required time, but does not know that there are insufficient funds in the checking account to cover the check, so it bounces when the tenant cashes it, this is not a willful failure to pay the interest required by the statute.  The landlord again had the will to succeed in paying the interest required by the statute, and should not be penalized.

 

     The above examples illustrate ways that a landlord could fail to pay the interest due, yet not willfully.  This interpretation gives meaning to every word in the statute.

 

     Finally, the Illinois Court of Appeals (2nd District) has recognized that it is a “time-honored maxim that ignorance of the law is not a defense.”  That court cited the U.S. Supreme Court opinion in Utermehle v. Norment, which said:

 
  "We know of no case where mere ignorance of the law, standing alone, constitutes any excuse or defense against its enforcement. It would be impossible to administer the law if ignorance of its provisions were a defense thereto."

 

If landlords were merely able to claim as a defense that they did not know about or understand the Interest Act, it would be impossible to administer the Interest Act.  It is impossible to prove that a landlord intended to break the law, and it is not necessary. 

 

     So in this lawyer's opinion, unless a landlord proves they had the will to succeed in paying the interest required by the law, a landlord's failure to pay the interest is a willful failure.  Ignorance of the law is no excuse. 

 

BACK      

 

    

Illinois Security

Deposit Interest Act

 

Penalty: 765 ILCS 715/2

* * *

  The lessor shall, within 30 days after the end of each 12 month rental period, pay to the lessee any interest, by cash or credit to be applied to rent due, except when the lessee is in default under the terms of the lease.

  A lessor who willfully fails or refuses to pay the interest required by this Act shall, upon a finding by a circuit court that he has willfully failed or refused to pay, be liable for an amount equal to the amount of the security deposit, together with court costs and reasonable attorneys fees.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

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