Illinois Renters Rights

Chicago Rents Going Up

2011-11-26T14:57:00.001-08:00

We recently published a note about seasonality in Chicago rents based on predictable peaks and troughs in renter demand every year, in the summer and winter respectively. The same graph of internet searches for "Rental" in Chicago showed a rising baseline for that search starting in 2008.

We guessed this was related to everyone (1) losing their home, (2) no longer qualifying for a loan to buy a home, or (3) feeling afraid to buy a home.

And indeed, Chicago rents for 2 bedroom apartments are going up since bottoming out in 2007 (when everyone finally figured out that anyone could buy a few condos). Modest gains every year are to be expected as part of inflation, but the pronounced increase from 2008 to the present might be evidence of a new trend based on fundamental changes in the economy.

Developers appear to believe the trend is long term. However, many developers and banks that lent to them also thought the boom in condominium sales would last longer than it did.

The Loop has seen construction of three apartment towers finished since 2009: at 161 W. Kinzie, 227 W. Washington and 210 N. Wells. Until these, there were not new apartment buildings in the Loop for a long time.

Other projects not far from the Loop that initially called for construction of condominiums have been reformed in favor of rental apartments. Next to the condominium tower finished at 860 W. Blackhawk, a neighboring tower at 840 W. Blackhawk that was initially expected to house more condo units is now being finished as an apartment tower.

The lenders financing these projects must believe Chicago is in for a protracted period of healthy rental demand, at least near the Loop. Only time will tell. After boasting an 8.8% unemployment rate slightly under the national average in October, 2010, Chicago's unemployment rate has risen above the national average to sit around 9.7% in October 2011. Apartment buildings full of people who can't pay rent are worse collateral than empty houses.

The message for renters? Don't sign up for a longer lease like two or more years just because rents are going up and you want to "lock in" a good rent. You might lock in a bad one. Instead, if you can, try to find a Chicago apartment and sign the lease between Thanksgiving and Christmas. The key advantage to renting over owning is flexibility. Now is not a bad time to "stay liquid." Good luck.

Evanston Security Deposit Law Requires a Real "Amount" in 21 Days, not "TBD"

2011-09-22T10:11:00.000-07:00

After a 2010 move-out, the landlords kept a whole $2650 security deposit from a group of three Northwestern University students in Evanston, and interest. The landlord claimed to have sent the tenants an e-mail within 21 days after they moved out, which stated that the whole deposit was being kept for various listed items in the amount of "TBD" (to be determined).

After a trial the judge in Skokie held that the tenants were not entitled to any of their deposit back, or relief under the Evanston Residential Landlord and Tenant Ordinance (ERLTO) because the landlord did not have to account for the damage within the 21-day accounting requirement if the property damage took more than 21 days to fix.

On appeal, the Court of Appeals reversed the judgment against the tenants. The Court of Appeals opinion is here. This opinion is subject to petition for rehearing and/or review by the Illinois Supreme Court and so is not necessarily final.

The Court of Appeals held that "the trial court erred when it found that defendants were not required to include a dollar estimate of the damages when they notified plaintiffs that they intended to withhold part of the security deposit. Defendants' use of 'TBD' as a placeholder was insufficient to satisfy the ERLTO."

The Court of Appeals concluded, saying:

"Defendants failed to give plaintiffs proper notice of deductions from their security deposit and failed to return the balance of the security deposit within 21 days as required by section 5-3-5-1(C) of the ERLTO. Defendants failed to prove their affirmative defense of compliance with the ERLTO, and they are therefore liable to plaintiffs. Moreover, defendants are not entitled to any setoff of plaintiffs' damages because they did not assert a counterclaim against plaintiffs. It was therefore error for the trial court to enter judgment in favor of defendants. We accordingly reverse and remand with directions to enter judgment for plaintiffs and for the determination of damages and reasonable attorney fees pursuant to section 5-3-5-1(F) of the ERLTO."

Best time to rent an apartment in Chicago?

2011-09-14T19:49:00.001-07:00

Supply and demand dictate the market rent for an apartment. Demand can be estimated from the volume of Chicago internet searches for "apartments":
It's a landlord's market out there in America, and especially Chicago. Foreclosures, layoffs, wiped out savings, and destroyed credit are pushing more and more people into renting instead of owning. Also, people who otherwise would have bought a first home in the last two years have seen the news and reconsidered an "investment" in real estate, opting to rent instead. Even if they wanted to buy, lending requirements are too stringent for many to qualify.

While home values remain depressed, monthly rental rates are healthy and rising. If you're a renter, one thing you can do to strengthen your position is start your search in the winter, not the summer.

The scramble to find an apartment in Chicago consistently peaks in late June, and bottoms out around Christmas. You can confidently rely on the fact that, around New Years, you are competing with significantly fewer apartment hunters. That means you ought to be able to negotiate a lower rent, more flexible term, or beneficial utility payment arrangement.

Finally, the graph does demonstrate that since December, 2008 the baseline volume of searches for apartments in Chicago on the internet has increased. Seasonality still rules, but overall competition for units in the City is increased and increasing since stock markets dove in the winter of 2008-2009. Especially after expiration of the first time home buyer "tax credit" in April 2010, the hunt for Chicago apartments has intensified.

New Law Requires Most Cook County Landlords to Change Locks With New Tenancy

2011-08-28T10:28:00.000-07:00

An amendment has passed to the Illinois Landlord and Tenant Act which creates a new Section 765 ILCS 705/15 "Changing or rekeying of the dwelling unit lock."

The new Section requires that landlords in Counties with more than three million people (Cook County) change or rekey the locks for a rental unit at the start of each new tenancy, unless it is an owner occupied building with four or fewer units. This new law does not just apply to Chicago or Evanston, but all of Cook County.

If the landlord does not comply with this new rule, which will take effect January 1, 2012, then that landlord may be liable to the tenant for damages sustained because of stolen property by someone with the old tenants' key.

The Section says:

(a) A lessor of a dwelling unit shall comply with the

provisions of this Section regarding the changing or rekeying

of the dwelling unit lock. For the purposes of this Section,

"dwelling unit" means a room or suite of rooms used for human

habitation and for which a lessor and a lessee have a written

lease agreement.

(b) After a dwelling unit has been vacated and on or before

the day that a new lessee takes possession of the dwelling

unit, the lessor shall change or rekey the immediate access to

the lessee's individual dwelling unit. For the purposes of this

Section, "change or rekey" means:

(1) replacing the lock;

(2) replacing the locking or cylinder mechanism in the

lock so that a different key is used to unlock the lock;

(3) changing the combination on a combination or

digital lock;

(4) changing an electronic lock so that the means or

method of unlocking the lock is changed from the

immediately prior tenant; or

(5) otherwise changing the means of gaining access to

the lessee's locked individual dwelling unit so that it is

not identical to the prior lessee's means of gaining access

to the lessee's locked individual dwelling unit.

required in this Section, and a theft occurs at that dwelling

unit that is attributable to the lessor's failure to change or

rekey the lock, the landlord is liable for any damages from the

theft that occurs as a result of the lessor's failure to comply

with this Section.

(d) The provisions of this Section do not apply if the

lessee has obtained the right to change or rekey the dwelling

unit lock pursuant to a written lease agreement.

(e) The provisions of this Section do not apply to (i) an

apartment rental in an apartment building with 4 units or less

when one of the units is occupied by the owner or (ii) the

rental of a room in a private home that is owner-occupied.

(f) This Section applies only in counties having a

population of more than 3,000,000.

Under part (b)(5), the Illinois Legislature protected this law from becoming outdated by doors that rely on biometric locks or keyless locks. Essentially, whatever mechanism the door uses for security, its means of access must be changed or reset so that the new tenant, and only the new tenant, has access (in addition to the landlord and authorized agents of the landlord). This will certainly stimulate the economy for locksmiths in Cook County.

Chicago landlord in foreclosure or losing unit for unpaid condo assessments!

2011-08-04T10:19:00.000-07:00

More and more tenants, especially in Chicago, are finding themselves subject to getting evicted because their landlord has essentially not been paying their rent. Sometimes, when someone is renting a condominium unit in Chicago, the condo association hasn't been paid its assessments for months. Or, the mortgage lender hasn't been paid. Often it is both.

We are presently getting more calls from tenants who are subject to lose possession thanks to unpaid assessments, as many banks have temporarily put their foreclosure actions on halt while condo associations have not. So even though Bank of America might not be moving forward on its foreclosure case because of a questionable Countrywide Home Loan mortgage, the condominium association will not hesitate to re-take possession.

Section 5-12-095 of the Chicago Residential Landlord & Tenant Ordinance (RLTO) required your landlord to give you written notice about any foreclosure pending against the unit before you entered into a lease, and if they don't, you might win penalty damages against the landlord equal to $200.00 plus costs and attorney fees. And that can be a basis to terminate the lease. But this section does not apply to condo association evictions that will put you out just as fast, or faster, than a foreclosure. In other words, the landlord was not specifically required to disclose a pending action against them by their condo association for unpaid assessments, or the fact that they are delinquent in paying their assessments.

A 2009 amendment to subsection (h)(3) of 735 ILCS 5/15-1701, a part of the Illinois Foreclosure Law, effective July 23, 2009, requires that a rent-paying tenant be given a proper written notice which then triggers that tenant's right to stay in the property and pay rent another 120 days (about four months) before being forced to move out. It says in part that:

(4) In a case of foreclosure where the occupant is current on his or her rent, or where timely written notice of to whom and where the rent is to be paid has not been provided to the occupant , or where the occupant has made good-faith efforts to make rental payments in order to keep current, any order of possession must allow the occupant to retain possession of the property covered in his or her rental agreement (i) for 120 days following the notice of the hearing on the supplemental petition that has been properly served upon the occupant , or (ii) through the duration of his or her lease, whichever is shorter, provided that if the duration of his or her lease is less than 30 days from the date of the order, the order shall allow the occupant to retain possession for 30 days from the date of the order. A mortgagee in possession, receiver, holder of a certificate of sale or deed, or purchaser at the judicial sale, who asserts that the occupant is not current in rent, shall file an affidavit to that effect in the supplemental petition proceeding. If the occupant has been given timely written notice of to whom and where the rent is to be paid, this item (4) shall only apply if the occupant continues to pay his or her rent in full during the 120-day period or has made good-faith efforts to pay the rent in full during that period. No mortgagee-in-possession, receiver or holder of a certificate of sale or deed, or purchaser who fails to file a supplemental petition under this subsection during the pendency of a mortgage foreclosure shall file a forcible entry and detainer action against an occupant of the mortgaged real estate until 90 days after a notice of intent to file such action has been properly served upon the occupant.

However, just like RLTO 5-12-095, this rule does not apply to actions for possession by the condominium association. Only foreclosures.

Sure, the law says the landlord owes you your security deposit back and probably damages for breaching their lease with you if you get kicked out because of a foreclosure. But this is a landlord who has not paid some serious bills for a long time. How likely do you think it is that you will collect against this landlord who has not paid their mortgage or assessments, even if you win in court? You are best off relying on your own investigation before entering into a lease, not the disclosures a landlord is required to make under the law. Real life and protecting yourself should trump dependence on your rights in this situation.

So before the apartment finding service gets you sign off on that lease, please check if your landlord might have a foreclosure or eviction filed against them in Cook County.

You can go to Cook County Case Search and (1) select "Chancery Division" then go down leaving selections about case number and date filed blank, then (2) type in your landlord's last name or its company name and select "Defendant" then (3) hit "Search Now".

You can use the same site and method to see if the landlord is being sued by the condo association by changing the kind of search from "Chancery Division" to "Civil Division."

"Owner Occupied Building" under RLTO 5-12-020(a)

2011-07-23T17:52:00.000-07:00

What is an owner occupied building with six or more units under Section 5-12-020(a) of the Chicago Residential Landlord & Tenant Ordinance ("RLTO")

The RLTO does not apply to a rental in a building if the owner of the property lives in the building AND the building has only six units, or fewer. ("Rental of the following dwelling units shall not be governed by this chapter... Dwelling units in owner occupied buildings containing six units or less"). RLTO 5-12-020(a).

Whether or not units are actually occupied by renters does not matter, just that the building contains the right number of apartments. See Meyer v. Cohen, 260 Ill. App. 3d 351, 358 (1st Dist. 1993).

Even though a separate coach house doesn't have its owner living in it, if the owner lives in the main house, then that coach house will be considered "owner occupied". The tenants renting in the coach house will not be protected by the RLTO if it does not have at least seven (7) units. See Berven v. Marquette Nat'l Bank & Trust No. 14662, 394 Ill. App. 3d 22 (1st Dist. 2009).

We wonder, what if the whole property has more than seven (7) units including the main house and also the coach house together? In the Berven case there were not seven units even combining both the coach house and the main house.

If there are five (5) or more units on the whole property, even in different buildings, tenants renting at both buildings should be covered by the Illinois Security Deposit Return Act even if an owner lives there. See Hoffman v. Altamore, 352 Ill. App. 3d 246, 256 (2d Dist. 2004) ("'residential real property' for purposes of section 1 of the Security Deposit Return Act is limited to buildings on the same parcel of real property"). No law says the Illinois Return Act doesn't apply in Chicago too.

The RLTO in Chicago will usually apply to a rental of a single family home, because the owner of the house doesn't live there. Only the tenant lives there. This is also true for a condominium that is rented out by its owner at a large building. Even if the landlord only owns that single unit in the building, they are covered by the RLTO because the building is not six or fewer units, despite being owner occupied. See VG Marina Mgmt. Corp. v. Wiener, 378 Ill. App. 3d 887 (2d Dist. 2008).

The question of who is an "owner" is answered by Section 030, which defines "owner" as anyone with a beneficial interest in the property and right to present enjoyment. In other words, even if a trust holds the title to the property, its beneficiaries are "owners" even though their name appears nowhere on the deed. Also, there can often be multiple owners, and non-human owners like LLC or corporation owners. In other words, the person or company you pay rent to is not necessarily the only owner, or even an owner. In Detrana v. Such, 368 Ill. App. 3d 861, 869 (1st Dist. 2006), it was held that a partial owner who lived in a basement but didn't get any income from the property, or manage the property, was still an owner. So the RLTO didn't apply to the building.

Town houses in a row that share the same roof are considered separate buildings under the RLTO. Allen v. Lin, 356 Ill. App. 3d 405, 413 (1st Dist. 2005). So if there is a row of five town-homes and your landlord lives in one, and you rent the one next-door, you may still be protected by the RLTO. On the other hand, if you rent a unit in a duplex, and the owner lives in the other unit, you are not protected by the RLTO. But if the building has seven or more units and the landlord lives in the same building, you are still protected.

The much thornier issue is what it means for an owner to "occupy" a building. We represented a tenant in a case before the trial court and the court of appeals where this was the problem. Reversing the trial court, the court of appeals held that a landlord did not occupy the building where our client rented, and called it the "case of the missing landlord." The court of appeals explained:

"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. The only possible evidence of occupation relates to the information on [Landlord's] driver's license and her testimony that she voted in Cook County. The remainder of her testimony and arguments on appeal amount to nothing more than a cynical attempt to prevent her tenant from obtaining the beneficial effects of the ordinance. Furthermore, there is plenty of evidence that clearly shows that [Landlord] was living in Joliet during the relevant times at issue and spent the vast majority of her time there. [Landlord], for all intents and purposes, was an absentee owner under these circumstances as she would be unaware and inaccessible should any tenant-related issues arise, which is contrary to the purposes of the owner-occupied exception carved out by city council."

This isn't precedent, but it should come as no surprise that the owner cannot live in a house in Joliet but say their Chicago apartment building is "owner occupied."

Breaking a Lease in Illinois

2009-01-18T17:25:00.000-08:00

More and more since October, 2008, we're getting tenants who need to break their leases because of job transfers, terminations, layoffs, and general financial ruin. For tenants outside Chicago and Oak Park, there's little we can do.

Outside the above-named municipalities, tenants don't have a lot to rely on when hoping to avoid a lease. There is not likely a statutory provision to rely on, except in cases of an imminent threat of violence at the rental dwelling (under the Illinois Safe Homes Act). One option, and it's not a great option, is to see if living conditions are so bad that the tenant can claim "constructive eviction."

CONSTRUCTIVE EVICTION IN ILLINOIS

Don't try this at home. A tenant can claim they are not liable for rent under the remainder of a lease term if they can prove they were “constructively evicted.” That requires showing that they were unable to use the rented premises cannot be used for dwelling; that it’s “untenantable.”

“Untenantability exists when the interference with occupancy is of such a nature that the property cannot be used for the purpose for which it was rented.” JMB Properties Urban Co. v. Paolucci, 237 Ill. App. 3d 563, 566 (3d Dist. 1992).

But a tenant can’t just claim the place became uninhabitable. They’ll have to prove that, and they’ll have to also prove that they moved out and surrendered possession to the landlord within a reasonable time after the condition of untenantability arose. Waiting too long to move out will constitute a waiver of the tenant’s right to raise the constructive eviction defense to the lease.

Illinois cases usually also require the tenant to show that they gave the landlord a reasonable notice of the allegedly untenantable condition and a chance to cure it. Only after giving notice, a chance to cure that the landlord blows, and moving out, can a tenant hope to defend an action for rent by the landlord. Obviously, if the tenant caused the problem, they’re not going to get to avoid the lease because of it.

Who decides whether the place was really uninhabitable, whether reasonable notice and a chance to cure were given the landlord, and if the tenant moved out in a reasonable time? The judge, if it’s a bench trial, or a jury if it’s a jury trial.

The reason we don’t suggest relying on constructive eviction is that it’s very subjective, and often devolves into a tenant’s word vs. landlord’s word argument.

Unless your unit was provably flooded, flattened by a tornado or tsunami, or burned down (through no fault of your own), constructive eviction may not be for you.

What's a "Willful Failure" to Pay Interest under the Illinois Security Deposit Interest Act?

2009-01-10T12:52:00.001-08:00

The Illinois Security Deposit Interest Act ("ISDIA") requires landlords of apartment complexes with 25 or more units (except public housing) to pay interest on tenants' security deposits within 30 days after the end of each of each tenants' 12-month rental periods. It has to paid at a rate that changes each year, and at the right time (based on when each particular tenant's 12-month rental period began). The ISDIA applies statewide, not just Chicago or Cook County.

But a landlord is only penalized under the ISDIA, in an amount equal to the tenant's whole security deposit, plus costs and attorney fees, if they willfully fail or refuse to pay the interest required by the ISDIA. Where this leaves landlords and tenants under the ISDIA is not settled.

We get a lot of motions to dismiss claiming that, since the landlord didn't know about the law, or misunderstood the law, their failure to pay the interest properly wasn't a "willful failure or refusal."

What is?

REFUSAL

If a tenant has to ask for interest, and doesn't get it, that's a refusal. That's easy.

But the ISDIA penalizes a landlord who willfully fails or refuses to pay the interest. Use of the word "or" means the legislature intended "willfully fails" to mean something different than "refuses". People v. Diane N. (in Re C.N.), 196 Ill. 2d 181, 211 (2001) ("disjunctive use of 'or' indicates a choice between alternatives").

Tenants don't need to prove a refusal. That's good, because even fewer tenants know their rights under the ISDIA than landlords. So what's a willful failure?

WILLFUL FAILURE

Our court of appeals for the first district, which covers Cook County (including Chicago), has held since 1989 that:

“the purpose of section 2 [of the ISDIA] was to set forth a penalty for lessors who ignored the mandate of section 1 of the Act.”

Gittleman v. Create, Inc., 189 Ill. App. 3d 199, 203 (1st Dist. 1989). This interpretation of the ISDIA is tenants' favorite. It sounds like an even lower burden for the tenant to prove their landlord "ignored" the ISDIA than to prove the landlord willfully failed to pay the required interest. In Gittleman, the court observed that, because the landlord's lease mentioned security deposit interest, the landlord was presumably aware of its legal obligation to pay the interest.

Gittleman also tells us what a willful failure is not. Many landlords argue that "willful" implies the landlord must be proven to have had an evil intent to violate the law. Proving that is hard, of course. But in Gittleman the majority of justices rejected the dissenting opinion of justice Jiganti, who believed a willful failure meant:

“willful is voluntary and intentional with the specific intent ‘to do something the law forbids, or with the specific intent to fail to do something the law requires to be done; that is to say, with bad purpose either to disobey or to disregard the law.'"

Gittleman, 189 Ill. App. 3d at 205-206. Fortunately for tenants, the interpretation of justice Jiganti was not adopted, thus lowering the bar for ISDIA claims.

Landlords' desire for an “excusable neglect” exception to the ISDIA also runs contrary to a fundamental rule of law in Illinois - that “individuals are still charged with knowing and abiding by the law. It is a time-honored maxim that ignorance of the law is not a defense.” People v. Karberg, 356 Ill. App. 3d 500, 503 (2nd Dist. 2005). “It would be impossible to administer the law if ignorance of its provisions were a defense thereto.” Id., citing Utermehle v. Norment, 197 U.S. 40, 55 (1905).

The above construction of "willful failure" may seem like strict liability, but it isn't. Application of the principals set forth above make a willful failure easy to prove, but still leave a landlord protected from penalties when unanticipated circumstances arise. All the landlord has to do is show their will to succeed in paying the interest.

THE WILL TO SUCCEED

In our biased opinion, the ISDIA willfulness requirement only protects a landlord who can show they had a will to succeed in paying the interest required by the ISDIA, but still failed. Examples of such would be a landlord who writes checks for the interest payments and intends to mail them at the right time but fails to because of a car accident on the way to the post office. Or, a landlord who pays interest at the right time, but the interest check bounces (the landlord would have to promptly re-issue new checks that clear). Such landlords would be able to show their will to succeed in paying the interest, thus proving their failure would not be willful.

Take it from the United States Supreme Court - ignorance of the law is not a defense.
Take it from the Illinois court of appeals - ignoring the ISDIA merits its penalty.

New Chicago RLTO Section 095 - Notice to Tenants of Foreclosure

2008-11-09T17:59:00.000-08:00

According to the National Multi-Housing Council, as many as 40% of foreclosures are of condo units and houses that are occupied by renters, not their owners. We have been seeing this firsthand in the practice at DepositLaw, as many renters come to us with excellent cases on paper, but no solvent party to recover the damages against. The tenant isn't going to recover damages equal to two-times their security deposit. They're not even going to recover their security deposit. Their landlord is broke, and the tenant is last in a long line to get whatever assets the landlord does have.

But can't the tenant recover their security deposit from the bank, or the new owner who buys the rental unit at a judicial sale? No. Section 080(e) of the Chicago Residential Landlord and Tenant Ordinance, and section 1.1 of the Illinois Security Deposit Return Act both contain an exception for a "lienholder" who is a successor landlord. While a "successor" landlord is usually liable to the tenant for their security deposit given to a prior landlord, a lienholder is not.

So to throw tenants a bone, Chicago's city council enacted section 095 in October, 2008. This section requires a landlord who is served with a foreclosure summons to notify their tenants within seven days, or the tenant is entitled to $200 (good luck collecting that) and can break their lease on short written notice. The lease termination provision is actually useful.

Also, if the landlord is already in foreclosure, they are now required to notify prospective tenants of this before the tenant signs a new lease. Hopefully this requirement (if actually followed) will prevent some tenants from giving up a huge security deposit to a black hole landlord. But most foreclosed-on landlords are not going to give the required notice, and will probably continue sucking up security deposits from unwitting tenants. When the tenants call us, and we check to see if the landlord is in foreclosure, it's usually too late.

Tenants, protect yourself. In Cook County, you can look at the clerk of court's case information page, search your landlord's name under "Defendant" and under "Chancery". If a foreclosure is filed against them, it ought to show up there. Good luck.

Five and Six Unit Owner-Occupied Chicago Apartment Buildings

2008-09-21T18:47:00.000-07:00

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.

Chicago Condo Tenants Posing as Landlords Scam

2008-09-21T16:13:00.000-07:00

A couple tenants have called in with the following situation:

They saw a Chicago condo unit for rent advertised on Craigslist or another place. They gave a security deposit or rent to someone posing as the owner of a condo unit, pursuant to a "lease." Turns out the "landlord" was themselves renting the condo unit as a tenant, from the real owner. In one case the tenant "landlord" had gotten three or more security deposits for "leases" he entered into with three different people to start in a month.

It's not hard for a condo renter to pose as the owner of the unit, because they'll have the keys and be able to show the unit to tenants. A condo renter can print a generic apartment lease off of the internet as easily as most real condo landlords do. Frighteningly, there's really nothing that makes this fraud hard to accomplish.

Once the tenant con artist was gone, with the money, the real landlord usually was not wiling to accept responsibility for their tenant's actions. Even if the real landlord provides contact information or the real identity of the imposter landlord, that imposter is not likely to still have the tenant's money. This type of individual has spent it already, and is likely judgment-proof.

Is the real landlord liable to the tenant for anything? As an owner of the unit, the real condo owner would be defined as a "landlord" under section 5-12-030(b) of the Chicago Residential Landlord & Tenant Ordinance (RLTO). Does this mean the real landlord could be liable to the duped tenant for two times their whole security deposit if it was commingled, or taken without issuance of a proper reciept, or otherwise handled in violation of RLTO § 5-12-080? Is the landlord at least liable for the deposit itself? It's unknown.

People need to protect themselves against this. First of all, just because it is on Craigslist doesn't mean it checks out. Craigslist is the first one to tell you that. It's a great place to start. The prospective tenant is urged to look up the property AND the person claiming to be its owner on the Cook County Recorder of Deeds website. To search by property you will need the PIN of the property. For a condo, the best way to do this is to plug in the street address to the Cook County Assessor's website, then find your unit number amongst the results, and there you will see your PIN. Then plug that PIN into the Recorder of Deeds PIN search and see who owns it. Second of all, make sure the lease you are presented with has the alleged landlord's home address on it. Make sure it's not just a PO Box, and make sure they really own THAT address (using the Deeds and Assessor sites, if the address is in Cook County). Finally, maybe it's worth asking to see their driver's license.

Mount Prospect Renter Rights

2008-09-20T18:43:00.001-07:00

It's not great, but it's unique. The village of Mount Prospect in Illinois has its own local code governing the landlord tenant relationship: Title 18, Chapter 23. It applies to all rentals with few exceptions, even covering single-family homes, condo units, duplexes, and owner-occupied buildings.

RENTAL AGREEMENTS IN MOUNT PROSPECT

All rental agreements and renewals in Mount Prospect have to be in writing, signed and dated by everyone, and given to everyone at the time of exection, according to section 23.1804(A)(3) which mandates that:

"All rental agreements between landlords and tenants, including renewal rental agreements to the extent not otherwise excepted in subsection B of this section, must be in writing, dated and signed by both parties with signed copies provided to both at the time of signing."

The rest of Illinois (except DeKalb and Oak Park) recognizes unwritten rental agreements; even Chicago.

Section 23.1804 also prohibits waivers of tenants' rights under the Mount Prospect code, providing at subpart (C) that:

"1. Except as otherwise provided by this article, no rental agreement may provide that the tenant or the landlord:

a. Agrees to waive or to forego rights or remedies under this article"

This subpart can make Mount Prospect interesting because:

"2. A provision prohibited by subsection C1 of this section included in a rental agreement is unenforceable. If a landlord deliberately attempts to enforce any provision in a rental agreement which is prohibited, the tenant may recover an amount totalling not more than two (2) months' rent and such damages, costs and fees as a court shall determine and award."

The C1(a) prohibition lets a tenant or their lawyer get creative, scouring rental agreements for provisions that purport to waive any of a tenant's rights under the rest of the Mount Prospect code. If it can be proven the landlord "deliberately attempted" to enforce the waiver provision, the tenant can collect up to two months' rent as penalty damages plus their court costs and attorney fees.

SECURITY DEPOSITS IN MOUNT PROSPECT

The Mount Prospect security deposit rules are somewhat unique also, extending deposit return regulation to all units in the village (not just buildings with five or more units, like the statewide Illinois Security Deposit Return Act). The Mount Prospect code requires at section 23.1806(A)(2)-(4) that:

"2. Upon termination of the tenancy, property or money held by the landlord as security or prepaid rent may be applied to the payment of accrued rent and to the payment of actual damages, which the landlord has suffered by reason of the tenant's noncompliance with section 23.1805 of this article, provided the landlord, within thirty (30) days of the date that the tenant has vacated the rental unit, delivers upon tenant a written notice, which shall include the reason for retaining the security deposit or portion thereof, including an itemized statement for any claim of unpaid rent and an itemized statement of any damages, together with copies of the actual paid damage, repair or replacement receipts or the estimated cost therefor, and provided further that the landlord has complied with any requested walk through inspection, as provided in subsection A3 of this section, and has included, as part of such notice, any inspection checklists disclosing that the damage in question occurred while the rental premises were occupied by the tenant. If an estimated cost is given, the landlord shall furnish the tenant with paid receipts or copies thereof within thirty (30) days from the date the statement showing an estimated cost was furnished to the tenant, as required by this subsection. In the event no such notice or notices with the required statements, checklists, and evidence of estimated costs, if required, is furnished to the tenant as provided herein, then the landlord shall return the security deposit in full to the tenant within forty five (45) days of the date that the tenant vacated the rental unit. For purposes of this provision, the decorating of a rental unit after a tenant's departure, including painting and rug shampooing, shall not be considered as damage and the cost thereof shall not be charged to the security deposit unless the rental agreement specifically provides that painting and rug shampooing are included as a part of the tenant's cleaning responsibility upon vacating the rental unit.

3. Where requested by either party to a rental agreement, a walk through inspection shall be made by the landlord and tenant, prior to the commencement of the rental term and/or again at the termination thereof and an inspection checklist of all damaged or missing items shall be made at the time of the walk through inspection and a copy thereof furnished to each party. Such request shall be in writing, shall be personally served not less than forty eight (48) hours, or mailed not less than five (5) business days before the date of the requested inspection and such inspections shall be conducted, unless otherwise agreed, on the landlord's regular business days and during his regular business hours. Items, which are checked as missing or damaged prior to commencement of the rental term, shall not be charged against the security deposit of the tenant. Upon request of the landlord or tenant, a representative of the village's environmental health department may accompany the parties on such walk through inspections.

Where a walk through inspection is requested, as provided herein, no portion of a security deposit shall be applied against damages incurred to a rental unit, unless the notice of damages required in subsection A2 of this section, includes the completed inspection checklist(s) showing the occurrence of such damage during the rental term.

4. Landlord's notice of the reasons for retaining the security deposit, as set forth in subsection A2 of this section, and either party's request for a walk through inspection, as set forth in subsection A3 of this section, must be sent certified mail, receipt requested, or served personally, in which case the party receiving the request, which may include the respective landlord, landlord's agent, lessee, or member of the household over the age of twelve (12), must be requested to sign in receipt thereof on a duplicate copy of the notice or request. Evidence that the notice or request was sent certified mail and signed for or otherwise returned, or that receipt of the notice or request was acknowledged on a duplicate copy, shall create a rebuttable presumption of delivery."

Only Mount Prospect and Evanston require that a landlord account in writing for their withholding from a deposit for rent. The rest of Illinois, and even Chicago do not require this. Also, only Mount Prospect and DeKalb require that a walk-through be granted a tenant who requests it. Only Mount Prospect requires that the landlord deliver their written itemized accounting for the tenant's security deposit by certified mail, or personal delivery. Finally, like only Urbana, this village code confirms that redecorating or carpet shampooing are not to be withheld for (unless the lease expressly says they are going to be).

However, it is unclear what remedy the tenant has under Mount Prospect's code when a landlord fails to comply with any of these requirements. This is why it is worth coming up with a way that the landlord's lease waives one of these requirements (not the redecorating or carpet shampooing limitations though, since those apparently can be waived), and then coming up with an argument that the landlord deliberately attempted to enforce that lease provision. This will at least get the tenant a shot a two-months' rent penalty damages plus their costs and attorney fees.

LANDLORD ENTRIES IN MOUNT PROSPECT

The code provides at section 23.1806(E) that:

"1. The landlord shall not abuse the right of access to the rental unit or use it to harass the tenant. Except in cases of emergency, the landlord shall give the tenant reasonable notice of his or her intent to enter and if at all practical may enter the unit only between eight o'clock (8:00) A.M. and eight o'clock (8:00) P.M. The landlord may enter a rental unit only for the following purposes:

a. To conduct a necessary inspection of the premises,
b. With the Village during the authorized annual license inspection or during the investigation of a complaint of violations of this Code,
c. To make necessary or agreed repairs, decorations, alterations or improvements,
d. To supply necessary or agreed services, or
e. To show the dwelling unit to prospective purchasers, mortgagees, tenants or workers.

2. The landlord may enter the rental unit without consent of the tenant in case of emergency. For purposes of this provision, the term "emergency" shall refer to a situation wherein access to the rental unit is necessary in order to prevent damage or destruction to the unit, or to the fixtures, equipment, appliances, furniture and other personal property contained therein, or in order to protect any person from injury. Nonpayment or delinquent payment of rent shall not constitute an emergency."

If a landlord or tenant are bad, and don't follow the above rules for giving notice about, and allowing, apartment entries, then they may be subject to the civil penalties of section 23.1811(C), "Abuse of Access by Landlord and Tenant" which mandates that:

"1. If the tenant refuses to allow lawful access, the landlord may obtain injunctive relief to compel access or terminate the rental agreement. In either case, the landlord may recover an amount equal to two (2) months' rent and such actual damages, costs and fees as a court shall determine and award.

2. If the landlord makes an unlawful entry or a lawful entry in an unreasonable manner or makes repeated demands for entry otherwise lawful, but in a manner which has the effect of harassing the tenant, the tenant may obtain injunctive relief to prevent the recurrence of the conduct or terminate the rental agreement. In either case, the tenant may recover an amount equal to not more than two (2) months' rent and such actual damages, costs and fees as a court shall determine and award. "

There is a lot to remember in the access rules, but most commonly occurring are landlord entries to show a unit to prospective renters or buyers without giving the tenant at least two days' advance notice. This may entitle the tenant to the damages equal to two months' rent plus costs and attorney fees. A landlord's lease provision purporting to allow apartment showings on 24 hours' notice, for example, is a waiver of the rules under section 23.1806(E) and unenforceable.

LEASE TERMINATIONS IN MOUNT PROSPECT

Like Chicago, and to a lesser extent Evanston, Mount Prospect offers tenants a number of ways they can take advantage of their landlord's failures to comply with the code's disclosure requirements (of the landlord's address and phone number, for example) and send a written notice demanding the required disclosure in 14 days. Failures to provide essnetial services (gas, water, electric) or failure to maintain, or failure to deliver possession (former tenant is still in the unit) can all be reasons a tenant can deliver the 14 day notice. Tenants should look at section 23.1808 for details about terminating their lease in Mount Prospect.

The foregoing does not cover all of the Mount Prospect code, but highlights the most likely encountered sections when assisting renters in that village.

Security Deposit Interest in Urbana

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Urbana has it's own local ordinance for the landlord tenant relationship that regulates security deposits. Chapter 12.5 of the Urbana City Code, "Landlord-Tenant Relationships" applies to almost every rental in town, including houses, owner-occupied buildings, condo units, etc. Next door in Champaign students are only covered by the statewide Illinois Security Deposit Return Act (must be 5 or more units in the building) and Illinois Security Deposit Interest Act (must be 25 or more units in the building or complex).

One special source of confusion in Urbana is its security deposit interest rule. Section Sec. 12.5-19 of the Urbana City Code regulates security deposit interest. It requires that:

(a) A landlord who receives a security deposit of one hundred dollars ($100.00) or more from a tenant to secure the payment of rent or to compensate for damage to property shall pay interest to the tenant, computed from the date the deposit is paid, at a rate equal to the interest paid by the largest commercial bank, as measured by total assets, having its main banking premises in Champaign County, Illinois, on minimum deposit passbook savings accounts as of the thirtieth of June immediately preceding the inception of the rental agreement on any such deposit held by the landlord for more than six (6) months.

(b) The landlord shall, within thirty (30) days after the end of each twelve-month rental period, pay to the tenant any interest, by cash or credit to be applied to rent due, except when the tenant is in default under the terms of the lease. For the purposes of this provision, default shall mean nonpayment of rent or a successful claim by the landlord for possession of the premises for good cause other than nonpayment of rent. A landlord who willfully fails or refuses to pay the interest required by this article shall, upon a finding by a circuit court that he/she has willfully failed or refused to pay, be liable for an amount equal to the amount of the security deposit, together with court costs and reasonable attorney's fees.

Urbana therefore requires ALL landlords to pay interest on security deposits, no matter how many apartments are in their building, if the security deposit is $100 or more. The "Security Deposit Return Summary" from a fairly large Champaign-Urbana rental company shows a common mistake:

The security deposit taken by the company is $590, but they expressly state that there is an interest credit of $0 because "Building has less than 25 units, no interest is due according to State of Illinois Law." It's true the state of Illinois law wouldn't require this landlord to pay interest on the $590 security deposit because the building has only 5 apartments. However, Urbana law does. This landlord's obvious familiarity with security deposit interest law would likely be enough evidence to show they "willfully failed" to pay the interest due under the Urbana City Code, and subject the landlord to penalty damages for the tenant equal to the whole security deposit, plus costs and attorney fees.

On the flip-side, we have also been contacted by tenants at large apartment complexes in Urbana with more than 25 units. Their management companies extract $99 security deposits and do not pay interest. These landlords obviously feel that, because the Urbana law does not apply, they are free to pay no interest. However, it is unlikely that compliance with the Urbana law can relieve these landlords from complying with the Illinois Security Deposit Interest Act, which requires payment of interest on security deposits of any amount at complexes with 25 or more units.

With few exceptions, every Urbana landlord has to pay interest on security deposits of $100 or more, and every Urbana landlord of a complex with 25 or more units must pay interest on security deposits of any amount.

What is the amount "Wrongfully withheld" under Evanston RLTO?

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The Evanston Residential Landlord and Tenant Ordinance (ERLTO) is unique in Illinois. It applies to almost all rental agreements in the city; condos, houses, and even apartments in owner occupied buildings with fewer than six units. The ERLTO requires a landlord to account for and/or return a tenant's security deposit within 21 days after the tenant vacates. This 21 day rule is the shortest timeframe in the state. Even in Chicago, and every other place in Illinois, a landlord has 30 days to account for a deposit in writing after the tenant moves out, and another 15 days after that (45 days after move-out) to return whatever is coming back to the tenant from their deposit.

The ERLTO provides at ERLTO § 5-1(C) that:

“Upon termination of the tenancy, property or money held by the landlord as security or prepaid rent may be applied to the payment of accrued rent and the amount of damages which the landlord has suffered by reason of the tenant’s noncompliance with section 5-3-4-1 of this chapter, all as itemized by the landlord in a written notice delivered to the tenant together with the amount due twenty one (21) days after the tenant has vacated his unit. Any security or prepaid rent not so applied, and any interest on such security due to the tenant, shall be paid to the tenant within twenty one (21) days after the tenant has vacated his unit.”

Under ERLTO § 5-1(F):

“If the landlord fails to comply with subsection (C) of this section, the tenant may recover the property and money due him together with damages in an amount equal to twice the amount wrongfully withheld and reasonable attorney fees.”

Note that, unlike the statewide Illinois Security Deposit Return Act, there is no requirement that a tenant prove their landlord's failure to comply with subsection (C) was willful, a refusal, or even knowing. This section is strict-liability like section 080 of the Chicago Residential Landlord and Tenant Ordinance.

We have had a case where the deposit was accounted for in writing and partially returned 22 days after the tenants moved out. At trial, the court awarded the tenants $1,750 out of their mostly withheld $3,300 security deposit plus interest. The trial court refused to award the tenants twice the amount wrongfully withheld or attorney fees though, since the landlord's failure to comply was only by one day.

The case had to go up to the court of appeals yielding a Rule 23 Order reversing the trial court's refusal to award twice the amount wrongfully withheld plus attorney fees.

On remand, the trial court had to decide what the amount "wrongfully withheld" was. We argued it had to be twice the whole $3,300 security deposit plus interest. The landlord of course argued it was only the $1,750 that should be doubled. Our argument in support of doubling the whole deposit in this case was as follows:

The ERLTO talks about twice the amount "wrongfully withheld" and also refers to return of the amount "due." These must have different meanings because “when the legislature uses certain words in one instance and different words in another, it intends a different meaning.” Blue Cat Lounge v. License Appeal Comm’n, 281 Ill. App. 3d 643, 646 (1st Dist. 1996). Under the Illinois Security Deposit Return Act, the tenant can recover twice the amount "due." The appellate court has held that this just means twice the amount the landlord kept and shouldn't have. In contrast, the amount "wrongfully withheld" is the amount that was not returned or accounted for within 21 days after the tenants move out, under the ERLTO. In a case where a landlord doesn't mail their written accounting for all the deposit they are withholding until 22 days after the tenant moves out, they have wrongfully withheld all of the deposit and interest. This again makes the ERLTO unique, because it does not entitle a tenant to two times the full amount of their security deposit in all cases (unlike the Chicago RLTO, which does). But the ERLTO also does not limit the tenant to two times the amount of deposit "due" (unlike the Return Act, which does).

In our case the trial court did enter judgment for the tenants for their $1,750 due, plus penalty damages equal to twice the whole $3,300 plus interest "wrongfully withheld" more than 21 days, plus attorney fees. This was the proper result.