City of Chicago Leases — Landlords Beware

Whether you lease out one unit or dozens, if you are a landlord in the City of Chicago, you must be careful to adhere to the requirements of the Chicago Residential Landlord and Tenant Ordinance (Municipal Code Title 5, Chapter 1). All residential rental units in Chicago are covered by this Ordinance, except those in owner-occupied buildings with less than six units, dormitories, hotel or motel rooms, hospital rooms, residential living space provided by an employer to an employee, and any residential unit in which the tenant is under contract to purchase the space from the landlord. The Ordinance specifies the landlord’s obligations and the tenant’s remedies for landlord’s failure to act as required by law. In order to avoid costly lawsuits from litigous tenants, a landlord should utilize a proper Chicago apartment lease that takes the Ordinance into account.

Landlords must be especially careful when dealing with the following lease-related issues:

1) When receiving a security deposit, the landlord must provide a written, signed and dated receipt of the security deposit. The receipt should include the landlord’s name and the address of the property that is subject to the lease. If the landlord fails to provide such a receipt, the tenant is entitled to an immediate return of the security deposit.

2) The landlord must hold the security deposit in a segregated account and pay the interest accrued on it every twelve months. Furthermore, within forty-five days after the lease ends, the landlord must return the security deposit, minus unpaid rent and a reasonable amount for repairs if the tenant damaged the unit. Otherwise the tenant may be awarded twice the security deposit, plus interest.

3) The landlord must provide his or his management company’s name, address, and phone number when the lease is signed, or the tenant may terminate the lease. If the tenant requests this information and the landlord fails to provide it, the landlord can become liable for additional damages.

4) Any late payment fees cannot be greater than $10 per month for the first $500 in rent, plus 5% of any amount in excess of $500. If the landlord attempts to enforce a late fee in excess of this amount, the tenant may recover up to two months’ rent.

5) If a landlord enters a tenant’s unit unlawfully, the tenant can obtain injunctive relief or terminate the lease.

These are just some of the items that a Chicago landlord should be aware of prior to entering into any lease. Indeed, anyone interested in renting out property in Chicago should familiarize themselves with the Ordinance to avoid running afoul of it. Penalties assessed against landlords can be severe, and landlords should proactively review their leases to ensure compliance with city law.