Chicago Security Deposit Law - Essentials


The Security Deposit and Last Month’s Rent Myth – Exposed

First, pursuant RLTO Section 5-12-140(a), no Chicago rental agreement may provide that the landlord or tenant agrees to waive or forego rights, remedies or obligations provided under this chapter. Second, pursuant to Chicago RLTO Section 5-12-080(d), deductions may be made to a Chicago tenant’s security deposit for only two (2) things: (1) any unpaid rent which has not been validly withheld or deducted pursuant to state or federal law or local ordinance ; (2) a reasonable amount necessary to repair any damages caused to the premises, reasonable wear and tear excluded. Based on a clear reading of Sections 5-12-080(d)(1) and (2), a Chicago landlord has the right to use a security deposit for unpaid rent and the tenant has that same right. Under the Chicago RLTO, the landlord’s “remedy” for non-payment of rent by a tenant is to deduct from the security deposit.

Now the punch line:  The infamous lease provision disallowing use of a security deposit for payment of rent waives and foregoes the rights, remedies, and obligations set forth in the Chicago RLTO 5-12-080(d)(1) as stated above.  RIGHT?!

Pursuant to the Chicago RLTO, a provision such as this is unenforceable and If the landlord “attempts” to enforce this provision a tenant may recover two (2) months’ rent as penalty, plus reasonable attorneys fees, and costs.  

Photocopies of Checks Are Not “Paid Receipts”

The First District Court of Appeals in Illinois has now stated a clearer definition of what constitutes a copy of a “paid receipt” under the Chicago RLTO Section 5-12-080(d) in their recent holding from Boyer v Buol, 2014 IL App. 132780 (1st. 4th Division, November 20, 2014).

Paragraph 46:  “We note initially that the Ordinance (Chicago RLTO) does not define the term receipt nor do the parties cite to any law as to its meaning. However, Black’s Law Dictionary defines a receipt as “[a] written acknowledgement that something has been received.” Black’s Law Dictionary 1382 (9th Ed. 2009); see also Miriam-Websters New Collegiate Dictionary 714 (7th ed. 1969) (defining “receipt” as “a writing acknowledging the receiving of money or goods”).  Thus in order to qualify as a receipt, the documentation provided defendants would have to show that the $220.00 in question was actually received by Bolek & Lolek.  This requirement is not satisfied by a photocopy of a check that has not been negotiated by the payee.  A photocopy of an unnegotiated check can easily be produced without the check being given to anyone, just like a picture of cash.” (emphasis added).

Paragraph 47:  “Accordingly, we affirm the trial courts finding that defendants failed to furnish plaintiff copies of paid receipts for the work done to her former apartment, in violation of section 5-12-080(d) of the Ordinance.”

Commingling & Payment of Interest in Chicago

RLTO Section 5-12-080(a)(1) prohibits the “commingling” of security deposits with “assets” of Chicago Landlords.  In other words, Chicago tenants’ security deposits shall “continue” to be the tenant’s property, and must be maintained in a separate, interest-bearing account (located in the State of Illinois). These are strict mandates; and are often times violated by Chicago landlords.  How do you find out if your Landlord commingled your security deposit?  Simply request the front and back bank images of your security deposit payment from your Bank (this information is sometimes easily located online and you can print the images).  Is it really worth the effort though? Absolutely.

Chicago RLTO Section 5-12-080(c) mandates that Chicago Landlords pay security deposit interest annually; not in a lump sum at the end of one’s tenancy.  If a Chicago Landlord fails to pay interest annually (or at all) a Chicago tenant shall be awarded damages equal to two (2) times the full security deposit (including refundable key, pet, and parking security deposits) plus all interest (no matter how small) plus all court costs and reasonable attorneys fees.  As ridiculous as this may seem, the Illinois Supreme Court ‘s decision in Lawrence v. Regent Realty Group (2003) confirms that a Landlord need not acted “willfully” to be found liable to the tenant for two (2) the security deposit for failing to pay interest.

Many of us have experienced frustrations and unfairness in dealing with landlords and security deposits in our lifetimes. Amazingly, the Chicago RLTO uniquely balances the powers between tenant and landlord so that anticipated frustration is replaced by pure relief – or at least compliance with the law

Chicago's Unique "Double" Security Deposit Penalty

Chicago tenants shall be awarded damages equal to two (2) times the amount of the security deposit (including refundable key, pet, and parking security deposits), plus reasonable attorneys fees and costs, if a Chicago landlord fails to comply with the numerous guidelines of Chicago RLTO Sections 5-12-080. As ridiculous as this “penalty” may seem, the Illinois Supreme Court’s decision in Lawrence v Regent Realty (2003) confirms that a landlord need not acted willfully to have been found in violation of Section 5-12-080 and thus liable to the tenant for two (2) times the amount of security deposit.  In other words, this security deposit law in Chicago equates to strict liability.

Your Landlord Pays Fees & Costs under the Chicago RLTO.

Should we have to go to court to recover your deposit, the Chicago Residential Landlord and Tenant Ordinance (RLTO) dictates that the Landlord shall pay the court costs and reasonable attorneys fees of the prevailing Plaintiff (i.e. You).