Chicago Security Deposit Laws

Key Takeaways

• No Statewide Deposit Limits: Illinois law does not cap security deposit amounts or pet deposits, giving landlords flexibility, though local ordinances like Chicago’s may impose additional rules.
• Chicago Has Stricter Storage Requirements:  Chicago landlords must hold deposits in a federally insured, interest-bearing account, keep funds separate, and provide a signed receipt to residents.
• Clear Rules on Deductions: Landlords may deduct for unpaid rent, utilities, excessive cleaning, or damage beyond normal wear and tear, but must provide proper documentation.
• Strict Return Deadlines Apply: Unused deposits must be returned within 45 days, and an itemized list of deductions must be sent within 30 days after move-out.

Disputes over deductions or missed return deadlines aren’t uncommon when it comes to security deposits. That’s why, as a savvy landlord, familiarizing yourself with the state’s security deposit rules is essential for success.  In Illinois, the security deposit laws are contained under 765 ILCS 710. These laws are part of the statewide landlord-tenant laws. 

The Illinois security deposit law outlines what landlords can and cannot do when handling residents’ security deposits. For example, the storage rules, acceptable deductions, and return deadlines. Here is a guide by Keyrenter Chicago Metro on the basics of the Illinois security deposit rules. 

Guide to Illinois Security Deposit Law

But even before we dive into the basics of the Illinois security deposit law, why exactly should you be charging residents a security deposit? The following are some of the reasons why you should be doing so. 

• Help cover unpaid utility bills. Residents should ensure they pay for all utilities in their name before moving out. If they don’t, you can make the appropriate deductions from their security deposit. 
• Help cover excessive cleaning costs. Most leases require residents to leave their rented premises in the move-in condition. If this isn’t the case, you can make the appropriate deductions from their security deposit to cover the cost of a professional cleaning service.

• • Help cover lost rent payments. Rent payment is a key resident responsibility. If they move out with a rent balance, you can use part or all of their deposit to cover the loss in rent payments. 
  • Help cover lost rental income in the event of property abandonment.
  • Help cover the cost of fixing damage exceeding normal wear and tear. 

  But the right to require security deposits comes with certain responsibilities as well. The following are the rules to keep in mind when requiring security deposits in Illinois. There may also be stricter rules at the local level, so ensure to do your due diligence for utmost compliance. 

  Maximum Security Deposit Limit

  In Illinois, there are no security deposit limits that landlords have to adhere to. You can collect as much or as little as you wish. However, most landlords find that charging 1.5X the monthly rent provides sufficient financial cushion. 

  Additional Pet Deposits 

  There is also no limit on how much additional pet deposits landlords can charge in Illinois. Just make sure to refund any unused portion after the resident has moved out. 

  That said, make sure to exempt residents with assistance animals from any extra pet fees or deposits. This is consistent with the Federal Fair Housing Act (FHA). The act requires landlords to make reasonable accommodations to disabled residents with service dogs or emotional support animals.

Security Deposit Storage 

The Illinois security deposit law sets no requirements that landlords must follow when storing residents’ security deposits. You can choose any reasonable method that you wish, as long as the funds are available for any refunds after the resident moves out.

However, there can be stricter rules in the local jurisdiction. A good example is in Chicago, for example landlords must store the deposit in a federally insured, interest-bearing account. Landlords must also not mix the funds with their own; they must be in a separate account. 

Additionally, Chicago landlords must provide their residents with a signed receipt immediately. The receipt must include the security deposit amount, the date it was received, and the landlord’s name. Landlords are also required to pay or credit interest on the security deposit to the tenant, with penalties imposed for noncompliance.

But none of these requirements apply at the state level, except if you own more than 25 rental units. In which case, the Illinois security deposit law requires that you pay residents interest annually. 

Security Deposit Deductions 

You can make certain deductions from a resident’s security deposit under certain circumstances. 

Generally, IL landlords can deduct when the resident does any of the following things and moves out without fixing or paying them. 

• Causes damage beyond normal wear and tear. 
• Leaves the unit in a dire state of uncleanliness. 
• Causes damage to fixtures or appliances. 
• Has unpaid rent, utilities, or fees. 
• Makes illegal property alterations.

Security Deposit Returns 

After a resident moves out, you must return the unused portion of their security deposit within 45 days. If you’re intending to make deductions, then you’ll need to send the resident an itemized list of damages within 30 days.

Conclusion 

There you have it. The essential rules landlords charging security deposits in Illinois must abide by. In addition to abiding by these rules, you should also familiarize yourself with other key regulations under 765 ILCS 705-750. 

If you have a question or need expert property management help in Chicago, look no further than Keyrenter Chicago Metro. We can provide you with all the help you need to maximize ROI. Get in touch to learn more! 

Disclaimer: Please note that the information provided in this blog is intended for general guidance and should not be considered as a replacement for professional legal advice. It is important to be aware that laws pertaining to property management may change, rendering this information outdated by the time you read it.