Landlords almost always ask for a security deposit when leasing property to a tenant. This is a sum of money that is held to cover any damage that may occur throughout the course of a tenancy. Although the landlord holds it, a security deposit remains the property of the tenant. The security deposit may be used only for damages that make the apartment un-rentable. Deductions for redecorating, carpet cleaning, new appliances are generally not proper unless there is extraordinary damage caused by the tenant beyond normal wear and tear. The Chicago Residential Landlord and Tenant Ordinance (RLTO) includes several regulations concerning security deposits. The pertinent parts are as follows:
The person who receives the security deposit must give you a receipt to the tenant that lists the amount of the deposit, the name of the landlord (if different from the person receiving the money), the date and a description of the residential space being leased.
A landlord must keep the deposit in a federally insured, interest bearing account at a financial institution. The deposit may not be combined with the landlord’s funds. The lease must list the bank and address where the security deposit is held.
Landlords must pay interest on the deposit at a rate determined annually by the City Comptroller. The interest must be paid to tenants within 30 days of the end of each 12-month period you have rented the apartment. Interest may be paid in cash or applied towards the next month’s rent.
If a landlord intends to withhold a portion of the security deposit because the tenant caused damage to the apartment, the landlord must notify the tenant in writing within (30) days. In the letter, the landlord must supply the tenant with a detailed list of damages and the cost for each repair. A landlord may not deduct any amount from the security deposit unless the letter is sent. A landlord has 45 days after a tenant moves out to return the entire security deposit or the balance after proper withholding for damage, plus any accrued interest.
If building ownership changes, both the old and new landlord may be liable for the security deposit unless notice of the transfer is given to the tenant.
If the landlord or the landlord’s agent fails to comply with any of the above conditions, the landlord may be liable for twice the amount of the security deposit, plus interest and attorney fees.
Not all residential properties are covered by the RLTO and thus, some of the above stated regulations would not apply. Exceptions to the RLTO include owner-occupied buildings with six units or less, vacation/short-term rentals, and co-ops. The Illinois Security Deposit Return Act governs residential properties with six or more dwelling units in the state of Illinois. If both the RLTO and the Security Deposit Return Act do not apply, check to see if your city has an ordinance that governs. If neither City nor State law apply, the lease provision regarding Security Deposits governs. Seek legal counsel to understand your legal liabilities and obligations relating to your security deposit.
