What’s the deal with security deposit laws in Illinois?
What happens to Illinois security deposits when over 3 million newly former homeowners flood the national rental market? Prairie State landlords leverage the ‘profit state’ by covering themselves with higher security deposits. Needless to say, security, pet and key deposits are all on the rise in the fifth most populous state in America.
Do landlords need to charge tenants a security deposit in Illinois?
Most landlords in Illinois do charge a security deposit, yet a significant percentage choose not to, allowing a last month’s rental payment deposit—paid in advance of moving in—to suffice. Typically, those who do not charge security deposits have high-turnover units as well as enough housing stock to absorb the occasional tenant costing more than they’re worth.
Higher-end rentals tend to charge higher deposits to ensure against potential damage to premium fixtures and finishing.
What are the limits on rental deposits in Illinois?
The State of Illinois has no statutory limit on rental security deposits.
And, between the rise of the Millennial generation and retiring Baby Boomers, Illinois can now brace itself for their share of the 4 million new renters forecast to enter the housing market during the coming decade, further lowering already thin vacancy rates. With even less competition for landlords on the horizon, deposits are most likely to increase in popularity and dollar amount.
Across the state, landlords tend to charge an amount equivalent to one or two months’ rent, with Chicago and other dense, urban areas leading the way for higher dollar amounts.
Your county or municipality might have caps on deposits, so check local legislation as well as state laws.
Subsidized, or Section 8, housing, no longer has a specific cap on security deposits. Landlords may request a deposit comparable to area properties rented without Section 8 vouchers.
A pet deposit may be charged, with no specified limit.
Most Chicago security deposits, for instance, still make it possible to meet rental obligations and have enough cash left for tickets to a legendary show at the Second City, charging an amount equivalent to one or two months’ rent.
A two-bedroom apartment renting for $1500 a month will typically require a last month’s rental deposit and an equal amount for the security deposit as well, for a move-in total of $4,500, including the first month’s rent. Higher deposits for more fashionable addresses are to be expected.
Do landlords need to provide a receipt for a security deposit?
A written security deposit receipt is not legally required in Illinois, but it’s always a good idea to issue one for your own records.
Does the money need to be kept in a separate account to allow it to accrue interest?
Illinois has no legal requirement for how deposits are held when under 25 units are owned.
Those who own 25 or more rental units in one location are required to pay interest to any tenants who are not in default of their lease. Additionally, owning 25 or more units in a single building or complex requires landlords to pay interest on security deposit to tenants whenever the deposit is retained by the landlord for six or more months.
Accrued interest must then be paid out to each tenant annually, within 30 days of each 12-month rental period. Landlords may choose to either credit the amount of earned interest toward the tenant’s next month’s rent, or to issue a separate payment directly to the tenant.
What can security deposit money be used for?
Illinois landlords may be entitled to keep some or all of a security deposit to pay for:
- Unpaid rent
- Damage and/or cleaning costs deemed to exceed normal wear and tear
- Resident’s unpaid utility bills
- Costs associated with breaking a rental lease agreement
What is the deadline to return a security deposit in Illinois?
Landlords owning four or fewer rental units in Illinois are not obligated to a specified time for returning a deposit, nor are you required to provide an itemized statement of any deductions.
Do landlords need to notify renters of security deposit money used to fix damages?
Owning five or more rental units changes the landscape on security deposits which then must be returned—less costs for cleaning or repairs—no later than 30 days after the tenant moves out, with an itemized, written list of deductions. When the security deposit is to be returned in full, however, landlords have 45 days to return it to the tenant.
When time to adequately repair damage exceeds 30 days, landlords may take an additional 30 days to settle the deposit by providing a written statement to the tenant (within 30 days of having vacated the unit) which states your intention to make deductions for damages and remit any balance to the tenant within a further 30 days. You must then also provide the tenant with a copy of the receipt(s) for repairs to their former residence.
Landlords failing to adhere to these guidelines risk being ordered by the state to return a tenant’s full deposit amount, along with any associated legal fees.
Where can I learn more about Illinois Security Deposit laws?
If you have any questions, or think you may want to learn more about security deposit laws in Illinois, please consult a lawyer.
Resources:
- Illinois General Assembly: Security Deposit Return Act
- Illinois Attorney General: Landlord and Tenant Rights and Laws
- Nolo: Illinois Security Deposit Limits
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