Sunday, September 21, 2008

Five and Six Unit Owner-Occupied Chicago Apartment Buildings

The Chicago Residential Landlord & Tenant Ordinance (RLTO) does not apply to owner-occupied buildings with six or fewer units. RLTO § 5-12-020. That means that if you rent in a Chicago apartment in a building with 2, 3, 4, 5, or 6 units, and the owner lives in it, you will not be protected by the RLTO. From the landlord's perspective this is great, since they have a lot less to worry about. As a renter, it means you are barred from all of the protections offered by the RLTO.

One class of Chicago renters that is overlooked are renters in owner-occupied buildings with five (5) or six (6) apartments. These renters are not covered by the RLTO, but still have the rights available to tenants statewide under the
Illinois Security Deposit Return Act. The Return Act applies to all rentals in the state at buildings with five or more units. Owner-occupancy is irrelevant under the Return Act. Chicago landlords who live in their five and six-unit buildings do not have to comply with Chicago's strict security deposit rules, but they can still get into trouble under the state law.

Tenants protected by just the Return Act in Chicago still have to prove their landlord provided a written statement of deductions in bad faith, or refused to provide the statement with supplemental copies of paid receipts, and then failed to return the security deposit within 45 days after move-out. Successfully proving bad faith or refusal can win the tenant damages equal to twice the amount withheld from them, plus court costs and attorney fees.

Can a tenant in a Chicago building with five or more units that is covered by the RLTO also recover damages under the Return Act? We think so, but there is no published answer to this question yet.

Landlords and tenants alike should evaluate their Chicago rental in light of both the RLTO and state law. Ignoring Illinois law in Chicago can mean missed opportunities for tenants and disaster for landlords.


Fay said...

I own a 2-flat and live in one of the units. I filed an eviction against my tenant for non-payment of rent, The tenant moved after living in the apartment for 6 months and not paying. We are in the process of going through the courts now, after we filed eviction. Do I have to return the tenants security deposit, since they own us on rent. I know the CRLTO does not apply to me, but I'm not sure if the Illinois law applies to me either since we are a 2-flat?

Chicago Deposit Law said...

Hi Fay yes, you are not covered by the Chicago RLTO if you live in your 2-unit apartment building, at least with respect to the tenants in the unit you rent out. (If you own other properties in the City, tenants in those buildings are likely protected by the RLTO).
The Illinois laws about security deposits also do not apply to you (the Return and Interest Acts) because there are not more than 5 or 25 units in your building.
You probably will be allowed to apply the tenants' security deposit to rent they validly owe you.

Peaches said...

I owned and live on first floor and rent out the 2nd floor of my 2 flat building.
Is it mandatory to deposit security deposit in a bank account to attain interest for tenant?
14 days After tenant moved I sent certified letter of itemize bill and repairs and cost of repairs done and pictures of damages tenant done.
Two weeks later I received a letter from REEDSMITH (James A. Rolfes) loacted 10 south Wacker Dr. Charging me with not returning tenant full deposit. After deduction for all damages replacing new carpet which I charge her half because it wasn't new and wall replacement damages from an air condition she install wrongfully and the water for 2 months damage the wall. And the Place was nasty and left over garbage and more needed to be done she really owe me. However I did return $300.00 dollars toward her moving fees cost she lost her job. She needed to move and my place needed to be repaired. They are asking for interest and all of the security deposit no way.I keep a account for Rental Business I never touch the Funds and I can show proof, I have proof of account I first deposit Security money in and I gave tenant my account number to deposit rent but she never use it she paid cash. What might happen if we go to court.