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Understanding Chicago Security Deposit Laws

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Illinois is one of the most 'pro tenant' states with many laws made to protect the rights of tenants as well as habitability standards. In Chicago however, landlord & tenant laws are more strict due to the Residential Landlord and Tenant Ordinance, also known as the Chicago RLTO.

What is the Chicago Residential Landlord and Tenant Ordinance?

Approved in 1986 and amended over the years, the RLTO’s purpose is “to protect and promote the public health, safety and welfare of its citizens” and “to encourage the landlord and the tenant to maintain and improve the quality of housing” citywide.

The ordinance covers most rental properties located in Chicago except units in owner-occupied buildings with six units or less; most units in hotels, motels and rooming houses; dormitories, shelters, employee’s quarters, and non-residential rental properties; and owner-occupied co-ops. Source

While tenants are protected by Illinois Laws, Chicago tenants have additional protections under the Chicago Residential Landlord and Tenant Ordinance.

Chicago Security Deposit Laws

When a landlord leases to a tenant in Chicago, the landlord must provide the tenant with a copy of the Residential Landlord and Tenant Ordinance. If one is not provided, a tenant can choose to terminate their lease agreement with advanced notification.

Key Protections under the Chicago RLTO

While the Chicago RLTO contains many provisions to alleviate issues tenants in Chicago have, it contains additional protections in regards to security deposits including:

The Length of time a Chicago Security Deposit Can Be Withheld

The Chicago Residential Landlord and Tenant Ordinance stipulates that a security deposit must be returned within a 45 day window after vacating a property or termination of a lease. The security deposit must be refunded to the tenant in full minus any deduction for damages or unpaid rent.

Security Deposits Must Be Separated from Personal Funds

All security deposits accepted by a landlord subject to the Chicago RLTO must keep security deposit funds separate from their personal funds. In addition to this, tenants must have the name of the bank that their security deposit is held. In many instances, landlords create a business entity due to this, as well as for tax and liability reasons.

Payment of Interest Earned on a Chicago Security Deposit

Payment of interest earned on the security deposit must be paid to the tenant within 30 days of the 112-month date. This money can also be used toward lease/rental payments or other established fees in the rental agreement.

Receiving a Record of Your Security Deposit

After a security deposit is given to a landlord in Chicago, the tenant must be given a receipt or record of the amount paid. This establishes written proof of receipt of funds and written record of the acceptance of the security deposit in line with the Chicago RLTO.

Receipts for Fees, Damages and/or Repairs

If damages have occurred, repairs made or fees incurred due to tenant actions, landlords must provide receipts and written documentation to the tenant.

Liability for Legal Fees Incurred

If a landlord is involved in a litigation matter with a tenant, the Chicago RLTO also requires landlords to pay for attorney fees in the event of a successful claim due to a violation of the landlord. This reduces the threat of high legal fees which had the potential to discourage tenants who have been wronged to come forward about wrongs they have incurred.

Illinois Real Estate, Landlord & Tenant Legal Services

From the creation of business entities to the negotiating, drafting and implementation of contracts that protect your personal & professional interests, Zara Law Group assists landlords and tenants with their legal goals.

For experienced real estate legal services in Illinois, contact our office to schedule a free consultation.
From real estate and business, real estate & professional legal matters to estate planning & probate, Zara Law Group is your partner in handling legal matters.  For a free consultation, please contact us at ‪708-365-8411‬.

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