Disclaimer: This blog post is meant for informational purposes only and does not constitute legal advice. Consult with a licensed attorney in Illinois for specific legal guidance.Â
For property managers in the state of Illinois, drafting a comprehensive lease agreement is not just about setting the terms for the duration and the amount of the rent. It’s an indispensable document to help you, your owners, and your tenants abide by both federal and state law and establish clear expectations and processes that make leasing easier for everyone involved.
This guide aims to clarify what an Illinois lease agreement is, who needs one, and the various types of lease agreements available. You’ll also learn about some of the laws and regulations related to lease agreements in Illinois.
And, after using the guide to brush up on your knowledge, you can download our free, sample customizable Illinois lease agreement template using the “Download Sample Form” button above to get a step closer to signing your leases. When drafting a lease, remember to always consult you own legal counsel to ensure compliance with the law.
What Is an Illinois Lease Agreement?
An Illinois lease agreement is a legally binding contract between an owner (or property manager) and a tenant. It outlines the terms and conditions associated with the rental of residential property in the state of Illinois. Besides the basics, such as rent amount, duration of the lease, and maintenance responsibilities, the agreement in Illinois should also encompass specific disclosures and addenda required by state law.
Leases must also account for federal regulations. For instance, federal law dictates that owners must disclose if the property has been impacted by lead-based paint. Proper disclosures not only protect tenants but shield property managers and owners from potential legal disputes, as well.
We’ll delve into the legal details in a later section, but first, let’s take a quick look at how a lease agreement benefits different parties.
Who Needs an Illinois Lease Agreement?
There are three major groups that benefit most from a well-written Illinois lease agreement. Let’s take a look at each one.
1. Property Managers & Owners: Those who own or manage residential properties in Illinois must have a comprehensive lease agreement in place. It outlines the terms of the lease and informs everyone involved in the contract of their rights and responsibilities.
2. Tenants: Anyone looking to rent a property in Illinois should sign a lease agreement. This document will provide tenants with clarity on their obligations during the rental period and any specific state-mandated disclosures.
3. Real Estate Agents: Agents who assist clients in finding rental properties should be familiar with Illinois lease agreements, as well, to guide their clients through the rental process effectively.
Types of Illinois Lease Agreements
Even if you specialize in a particular type of property or leasing arrangement, it helps to stay aware of the various categories of lease agreements out there. Here’s an overview of typical lease agreements:
1. Standard Residential Lease Agreement: This is the most common type, usually for a fixed term, such as 12 months. It outlines rent amount, security deposit, maintenance responsibilities, and other basic terms.
2. Month-to-Month Lease: Unlike the standard lease, this agreement renews every month, if agreed upon by both parties. It provides flexibility because either party can terminate the lease with a 30-day notice (or as specified in the agreement).
3. Sublease Agreement: This is used when an original tenant wishes to rent out the property (or a part of it) to a third party. It’s needed whenever the primary lease allows subletting.
4. Commercial Lease Agreement: These agreements are primarily for non-residential properties such as office spaces or retail shops. It covers everything from the term of the lease and the upkeep of commercial space, to how that space can be used by the tenant.
5. Room Rental (Roommate) Agreement: If an owner rents out individual rooms to multiple tenants, this agreement is beneficial. It specifies each tenant’s responsibilities and rights.
6. Lease with Option to Purchase: This is for tenants interested in buying the property. It allows them to live in the property and purchase it under specific terms later.
7. Periodic Lease: A periodic lease, often referred to as a “periodic tenancy,” is characterized by a lease period (other than a month or a year) that automatically renews at the end of each period until either the tenant or the owner gives notice to terminate. Periodic leases offer flexibility for both owners and tenants. Tenants can leave without being locked into a long-term lease, and owners can adjust the terms or end the lease with proper notice.
What Should an Illinois Lease Agreement Include?
Every seasoned property manager in Illinois understands the significance of a comprehensive lease agreement. Rental laws in the state are clearly stipulated, meaning an effective lease agreement can set out clear parameters and protections for both property managers and tenants. Here are the components you should include:
Parties Involved
Every lease agreement in Illinois should identify the parties involved. Typically, that includes the rental owner or property management company, acting as the owner, and the tenant. Where there is a co-signer or guarantor, their roles and responsibilities should be outlined, as well. Clear contact information for all parties is necessary for streamlined communication.
Lease Duration Dates
Lease terms are a fundamental part of every lease agreement. They set out the period the tenant has agreed to rent the property. In Illinois, lease terms can be as short as week-to-week or as long as year-to-year. Some leases might also be periodic, known as periodic leases, which continue until terminated by either party.
Rent and Security Deposit Information
Rent and the security deposit are important elements in an Illinois lease agreement. The amount of rent and the payment timeline should be outlined clearly.
Details about the security deposit, including the amount, reasons for any deductions, and the timelines for refund, should be provided. The Security Deposit Return Act of Illinois can provide guidance on this requirement.
Occupancy Limits
Occupancy limits are determined by various factors, including unit size and safety provisions. The lease should stipulate the maximum number of occupants and may include other guidelines or restrictions.
Property Management Company and Tenant Responsibilities
In your lease agreement, spell out the responsibilities of the property management company and tenant clearly. Property managers or owners have duties such as maintaining a habitable property, while tenants must operate facilities responsibly and maintain cleanliness.
Pet Policies
Illinois lease agreements should outline if pets are permitted and specify any related conditions. You may also introduce a mandatory pet deposit to account for potential damages.
Illinois Lease Agreement Addenda and Disclosures
Beyond knowing the sections that go into an Illinois lease agreement, you’ll need to consider addenda and disclosures in your document, as well. Starting with an informed approach to these stipulations not only helps you maintain a good professional relationship with your tenants but also shields you from potential legal pitfalls.
This list is not exhaustive, so consult a legal professional if you’re unsure about what to include in your own agreements.
Lead-Based Paint Disclosure
Every rental property constructed before 1978 must include a lead-based paint disclosure. The federal government mandated this to keep prospective tenants informed about potential health risks. This disclosure should include:
-Any known presence of lead-based paint
-An EPA-approved pamphlet outlining the risks of lead-based paint
-A clause in the lease agreement stating that the tenant has received the disclosure
The Illinois Owner and Tenant Rights and Laws Pamphlet
Illinois requires owners to provide renters with an official pamphlet that details the rights and laws for owners and tenants. This guide aids renters in understanding their rights and assists owners in managing their properties lawfully.
Retaliation Disclosure
Owners in Illinois are prohibited from retaliating against tenants who exercise their rights, such as complaining about living conditions or joining a tenant union. If any action that appears retaliatory is taken within six months of such an activity by the tenant, there is a presumption of retaliation.
Domestic Violence Victim Protections
Illinois mandates owners to acknowledge a tenant’s rights regarding domestic violence situations. For instance:
-A tenant may terminate their lease early if they or a family member face a domestic violence threat.
-The owner cannot penalize or evict a tenant based solely on being a domestic violence victim.
Smoke and Carbon Monoxide Detector Compliance
Remember to equip your properties with functioning smoke and carbon monoxide detectors. Illinois law (along with many other states, including Florida, California, and New York) requires owners to install and maintain these detectors in rental units, and failing to comply can result in penalties.
Concession Granted
If any concessions, such as a rent reduction, are granted to the tenant, an addendum should be included in the lease detailing the specifics. This promotes clarity and avoids potential disputes.
Shared Meter
In cases where utilities are shared among multiple tenants or between the owner and tenant, a shared meter disclosure is essential. This addendum defines how utilities are divided and billed.
Optional Disclosures and Addenda
While some disclosures are mandatory, owners may also include optional ones such as:
-Pet policies
-Maintenance responsibilities
-Parking rules
Although not mandated, these addenda foster clear communication and preempt potential disagreements.
Consequences for Not Including Mandatory Disclosures
Failure to include required disclosures can result in:
-Lease termination rights for the tenant
-Financial penalties for the owner
-Potential legal actions against the owner
By ensuring that you meet these requirements, you foster a transparent and trusting relationship with your tenants and safeguard yourself against potential legal issues.
Illinois Lease Agreement Laws and Regulations
Designed to foster clarity and fairness between owners and tenants, Illinois leasing laws and regulations address various elements of the leasing process, from security deposits to late fees. As a property manager, stay informed of lease agreement regulations in the following areas.
Security Deposits
Unlike some states, Illinois does not set a statewide limit on how much an owner can charge for a security deposit. However, specific cities, such as Chicago, have their own regulations.
According to the Illinois Security Deposit Return Act, owners must return security deposits to tenants within 45 days of the lease’s termination, unless there are deductions. If deductions are made, the owner must provide an itemized list of damages and the cost of repairs within 30 days. Failure to comply can result in penalties where the owner might be liable for twice the deposit amount plus attorney fees.
The Owner’s Right of Entry
Under Illinois law, owners do not have a statutory right of entry. It’s common practice for owners to provide at least 24 hours’ notice before entering the rented premises, except in emergencies. Property managers are responsible for outlining access rights in the lease agreement to avoid misunderstandings and potential legal conflicts.
Grace Period and Late Fees
The Illinois Landlord and Tenant Act does not set a specific grace period for late rent payments. However, owners are typically required to wait five days before they can charge a late fee, which is stipulated in many local ordinances, such as Chicago’s Residential Landlord and Tenant Ordinance(RLTO).
The RLTO also caps late fees at $10 for the first $500 in monthly rent, plus 5% for any amount exceeding $500. Property managers should be aware of any city-specific regulations and make sure that late fees are both reasonable and clearly specified in the lease agreement.
Taking the Next Steps with Your Illinois Lease Agreement
An Illinois lease agreement is an indispensable tool for property managers in the state. Not only does it set clear expectations between owners and tenants, but it also keeps you and your owners compliant with Illinois’s specific rental laws.
As a reminder, always seek legal advice or consult with an attorney familiar with Illinois property laws when drafting or updating your lease agreements.
If you’re ready to take the next step, you can download our sample template for free using the “Download Sample Form” button above, make whatever customizations you need, and start sending out your Illinois lease agreements in no time. Remember to have legal counsel review your lease to ensure compliance with Illinois law.
