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Chicago Security Deposit Check List for Tenants

May 23, 2019

A clear majority of the rental properties in the City of Chicago are governed under the Chicago Residential Landlord-Tenant Act, or, as it is often referred to as the "RLTO" or the "CRLTO". There are a few exceptions in which rental units are not covered under the RLTO (note Airbnb renters, your SOL) but given the fact that most units are subject to the RLTO, the focus of this post is the Chicago renter who has paid a security deposit to their landlord and what must be done by the landlord to be in compliance with the RLTO. Note if you paid a security deposit, your dwelling unit is within the City of Chicago, and the RLTO limited exceptions do not apply to you, your landlord must abide by certain requirements or you may be entitled to damages equal to two times your security deposit, plus court costs and attorney fees (if you are successful in the litigation, of course).

  • If you want to read the entire RLTO, it can be found at Chapter 5-12 of the Chicago Municipal Code (google will pull it right up for you, too).

  • The RLTO is broad in scope, so if a specific exception does not apply to your rental situation (such as owner-occupied buildings of 6 units or less) then assume the ordinance applies to you or us, we can confirm.

  • Security deposit administration is often the most common pitfall for Chicago landlords.

Chicago Security Deposit Requirements:

If a landlord takes a security deposit from a tenant, there are six things that they must do in order to avoid liability under the CRLTO:

1) Receipt requirement: Your landlord must provide a receipt for the security deposit funds.

  1. In the security deposit receipt, the following information must be included: the date the deposit was received, the amount of the deposit, the name of the person who received the deposit, and a description of the dwelling unit.

  2. If the deposit was tendered to a property management company of the landlord, they must identify the landlord on whose behalf the funds were accepted.

  3. If the security deposit was paid via electronic funds, the landlord can provide an electronic receipt containing all the information listed above, so long as there is a digital signature as defined under IL law.

2) Location of the financial institution where the security deposit is held: The landlord must disclose where it is holding the security deposit funds in the lease agreement and the name and address of the financial institution must be listed on the rental agreement. In addition, the funds must be held in a federally insured, interest-bearing account of a financial institution that is located within Illinois.

  1. If there is no written lease, the landlord must, within 14 days, provide that information to the tenant in writing of the location of the financial institution.

  2. If the landlord transfers the funds to a different financial institution during the tenancy, the landlord must notify the tenant in writing of the new location within 14 days of the transfer.

3) No commingling of the security deposit with the landlord's other assets: The landlord cannot commingle the security deposit with other assets of the landlord, it must be held in its own account.

4) Payment of Annual Interest: The landlord must pay annual interest on security deposit held for more than six months at a rate specified by the city comptroller. In 2017, the annual interest rate is .01% so the interest is minimal, but if your landlord fails to remit that minimal payment to you, you could be entitled to your entire security deposit, plus damages equally two times the security deposit, attorney fees and costs. If your lease is longer than a year, the landlord must still remit the interest to you every 12 months or provide a rent credit for the interest the following month. In short, the landlord must make an interest payment on the security deposit (by cash or rent credit) within thirty days following the end of each twelve-month rental period, unless the lease terminates after 12 months, the landlord has 45 days to pay interest).

5) Timely Return of the Security Deposit: The landlord must return the entire security deposit, plus accrued interest, within 45 days after the tenant vacates the unit. The landlord may only make deductions from the security deposit for (1) unpaid rent which was not validly withheld pursuant to the applicable law (IL state, local ordinance, federal law) and (2) the reasonable costs of repairing the damage that is not the result of reasonable wear and tear.

6) Provide proper evidence of repairs that were deducted from the security deposit. If the landlord makes deductions for repairs, then the landlord must send either actual costs or estimated costs within 30 days.

1. If the landlord sent estimated costs within the 30-day time period, actual costs must still be submitted no later than 30 days (so a total of 60 days from the tenant vacating the dwelling unit) or it will be in violation of the security deposit ordinance in Chicago.

2. If the landlord uses its own employees for the repair work, the landlord must provide a "certification" of actual costs within the time frames listed above.

In short, it is no wonder many property management companies and landlords are starting to veer away from collecting security deposits and instead, using non-refundable move-in and move-out fees. The security deposit penalties cannot be waived in a lease agreement, therefore, if a Chicago landlord opts to take a security deposit, he or she should be aware of the laws that govern them or they may find themselves in hot water under one or all of the requirements listed above. It should be noted that if your landlord violated multiple requirements regarding the administration of the security deposit, you can only recover under one of the theories, not all.

That being said, the recovery is referred to as "singular" in that a tenant is only entitled to one award of damages equal to double the security deposit, but note that you still will get back your entire deposit plus two more in the event that you prove a violation of the above-referenced requirements. If you have any questions at all regarding your security deposit and what your rights are as a tenant or landlord, please do not hesitate to contact us as we are well versed in the Chicago Security Deposit law and Chicago Tenant Law. We would be delighted to assist you in any representation you may need in that regard.