Rental of the following dwelling units shall not be governed by this chapter, unless the rental agreement thereof is created to avoid the application of this chapter:
(a) Dwelling units in owner-occupied buildings containing six units or less; provided, however, that the provisions of Sections 5-12-130(j) and 5-12-160 shall apply to every rented dwelling unit in such buildings within the City of Chicago;
(b) dwelling units in hotels, motels, inns, bed-and-breakfast establishments, rooming houses and boardinghouses, but only until such time as the dwelling unit has been occupied by a tenant for 32 or more continuous days and tenant pays a monthly rent, exclusive of any period of wrongful occupancy contrary to agreement with an owner. Notwithstanding the above, the prohibition against interruption of tenant occupancy set forth in Section 5-12-160 shall apply to every rented dwelling unit in such buildings within the City of Chicago. No landlord shall bring an action to recover possession of such unit, or avoid renting monthly in order to avoid the application of this chapter. Any willful attempt to avoid application of this chapter by an owner may be punishable by criminal or civil action;
(c) Housing accommodations in any hospital, convent, monastery, extended care facility, asylum or not-for-profit home for the aged, temporary overnight shelter, transitional shelter, or in a dormitory owned and operated by an elementary school, high school or institution of higher learning; student housing accommodations wherein a housing agreement or housing contract is entered into between the student and an institution of higher learning or student housing wherein the institution exercises control or supervision of the students: or student housing owned and operated by a tax exempt organization affiliated with an institution of higher learning.
(d) A dwelling unit that is occupied by a purchaser pursuant to a real estate purchase contract prior to the transfer of title to such property to such purchaser, or by a seller of property pursuant to a real estate purchase contract subsequent to the transfer of title from such seller;
(e) A dwelling unit occupied by an employee of a landlord whose right to occupancy is conditional upon employment in or about the premises; and
(f) A dwelling unit in a cooperative occupied by a holder of a proprietary lease.
The most common Chicago RLTO exclusion faced by Chicago renters is RLTO Section 5-12-020(a). Under Chicago RLTO Section 5-12-020(a) there is no coverage under the Chicago RLTO if the landlord BOTH occupies the building AND there are six (6)or fewer units in the building. This is called the “owner-occupied” exclusion. Chicago Landlords subject to this exclusion still have to follow the notice to renew requirements in Chicago RLTO Section 5-12-130 and the rules against unlawful interference with possession in Chicago RLTO Section 5-12-160.
Cases from the Illinois Court of Appeals have clarified that, for purposes of Chicago RLTO Section 5-12-020(a), a row of townhouses that are under one (1) roof still do not amount to a single “building.” Instead, each townhouse is a separate building.
The Illinois Appellate Court has also ruled that when the owner lives in the main house on a parcel of land where there is also a detached coach house with 1-6 units, and tenants live in the coach house, those tenants are not protected by the Chicago RLTO. In other words, even though no owner lives in the tenants[ building, the owner “occupies” both their main house and also the coach house pursuant to the definition of “dwelling unit” found at RLTO § 5-12-030(a).
The Illinois Court of Appeals has also said more recently in an unpublished Rule 23 order that:
“we find that in order to ‘occupy’ a building, there must at least exist a degree of ‘living,’ as set forth in Berven, sufficient to effectuate the aforementioned purposes of the owner-occupied exception. * * * An absentee landlord could keep a unit in numerous properties and claim to be occupying all of them if he occasionally visited the location and had mail sent there.”
Finally, it is important for renters and landlords to remember that even if the Chicago RLTO does not apply, the Illinois Security Deposit Acts or the new 2021 Cook County Ordinance (RTLO) may still apply. For example, owner-occupied buildings with five or six apartments are excluded from Chicago RLTO coverage, but remain covered by the Illinois Security Deposit Return Act.