Illinois tenants may be required to pay a security deposit, typically used to cover unpaid rent, repairs, and cleaning fees. Once an Illinois landlord receives a security deposit, he or she is not required to produce proof of receipt, unlike in other states. In Illinois, landlords are not bound by a set limit on the amount of security deposit they can request, but they must pay interest on deposits held for six months or more in buildings with 25 or more units. Additionally, Illinois landlords must return the security deposit within 45 days after the tenant moves out, provided the unit is in acceptable condition and all rent is paid, or provide an itemized statement of damages and receipts within 30 days if any deductions are made.
If you would like to know more about the rights of an Illinois tenant, you can read our article, Illinois Tenant Rights Explained.
How Much Does a Security Deposit Cost?
Although security deposits are normally equal to one month’s rent, Illinois landlords can require any amount they prefer. If a tenant’s security deposit is held for six months or longer on a building with 25 units or more, Illinois state law requires landlords to pay their tenants interest on the amount or apply the interest as a credit to the rent every twelve months. If a tenant’s security deposit is held for six months or longer on a building with less than 25 units, Illinois landlords are not required to pay interest.
Do Security Deposits Gain Interest?
Security deposit interest payments have to abide by a strict set of rules. First, the interest rate is always equal to the interest rate paid on minimum deposit savings accounts by the largest commercial bank in Illinois. Second, the tenant has to receive his or her earned interest within 30 days of the end of each twelve-month lease term. However, if the Illinois tenant has defaulted on his or her lease, the landlord is not required to pay this interest.
If the landlord fails to pay this interest, the tenant does have the right to sue in order to recover an equal amount to the security deposit, court costs, and attorney fees.
Do You Get Your Security Deposit Back When You Move Out?
Luckily, if a tenant moves, The Illinois Security Deposit Return Act grants tenants the right to their security deposits in full within 45 days of the moving date, if:
· The tenant’s building has five units or more
· The tenant does not owe any back rent
· The rental unit is left in acceptable condition
· The rental unit is clean
If a landlord refuses to return all or any portion of a security deposit, the landlord must provide an itemized statement of the rental unit’s damages, along with a paid receipt within 30 days of the tenant’s move date.
What Happens to a Security Deposit if I Switch Landlords?
If an existing landlord transfers ownership to a new landlord in Illinois, the existing landlord is responsible for transferring all pending security deposits to the new landlord, including accrued interest. Once the security deposits are officially transferred, the new landlord has 21 days to alert his or her tenants with a formal notice on the “primary entrance” of all units for whom he or she has received a security deposit, informing tenants that he or she is now in possession of the tenants’ security deposit, including accumulated interest.\
If you are an Illinois tenant and you want to go the extra mile to protect your security deposit, be sure to thoroughly inspect your unit for damages and concerns before signing a lease or moving. Document any and all existing damages in writing, with supporting photos.
The Chicago Residential Landlord Tenant Ordinance and Security Deposits
Update 9/11/18: A reader pointed out that the city of Chicago has more stringent security deposit laws than the rest of the state. In this update, we will give a brief explanation of these requirements. However, the important point to note is that municipalities within Illinois have the power to add to state rules regarding the landlord-tenant relationship. When making legal decisions, be sure to consult the laws of your town and county as well as the state.
In addition to the obligations provided by state law, the Chicago Residential Landlord Tenant Ordinance (“CRLTO”) requires Chicago landlords to:
- Provide a proper receipt for security deposit funds;
- Disclose where the landlord is holding security deposit funds;
- Avoid commingling security deposit funds with the landlord’s own money;
- Provide proper evidence of any repairs for which security deposit funds are used.
In the following article, we will examine the CRLTO in more detail, including a more detailed explanation of each requirement.
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