New ordinance outlines security deposit issues while moving into or out of a rental in Cook County - Gardi & Haught, Ltd.

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Security Deposit Issues Rental Agreement

New ordinance outlines security deposit issues while moving into or out of a rental in Cook County

By Michael DeSantis

In recent blogs, we have discussed the newly enacted Cook County Residential Tenant and Landlord Ordinance. This time, we will focus on Section 42-811, which discusses security deposits.

First, a landlord may not demand or receive a security deposit in excess of 1 1/2 months’ rent. The ordinance specifically states that you can’t get around this by labeling charges as fees. If the landlord requires a security deposit in excess of one month’s rent, the tenant can pay everything at once or pay the amount that is in excess of one month’s rent in no more than six equal installments no later than six months after the effective date of the lease.

Second, a landlord must hold all security deposits in a federally insured account with a bank, savings and loan association, or other financial institution in Illinois. This will help ensure that the security deposit is not commingled with the assets of the landlord. The landlord may accept payment of the first month’s rent and security deposit in one check or electronic transfer and deposit the funds in one account only if the landlord transfers the security deposit into a separate account within seven business days of accepting the money.

Third, the landlord must disclose the name of the financial institution where the landlord has put the security deposit on the rental agreement signed by the tenant. If the landlord wants to transfer the security deposit to a different account, they shall notify the tenant in writing of the name of the new financial institution within 14 days of the transfer or within a reasonable time.

Next, if the landlord receives a security deposit, they must give the tenant a receipt indicating the amount of the security deposit, the name of the person receiving it, and in the case of an agent, the name of the landlord for whom such a security deposit is received, the date when it is received, and a description of the dwelling unit. This receipt must be signed by the person receiving the security deposit. If the landlord fails to do this the tenant is entitled to an immediate return of the security deposit.

Also, if a landlord sells the property to someone else the new landlord shall be liable to the tenant for the security deposit. The old landlord will remain liable to the tenant until they transfer the security deposit to the new landlord and provide written notice to the tenant of the transfer specifying the name, business address, and business telephone number of the new landlord or their agent within 10 days of the transfer. Within 14 days from the date of transfer the new landlord must notify the tenant in writing that the security deposit was transferred and the new landlord is holding security deposit. This notice should also contain the name, business address, and business telephone number of that landlord or their agent.

At the end of the tenancy, a landlord shall return the security deposit to the tenant within 30 days after they have vacated. However, the landlord may deduct any unpaid rent that has not been validly withheld pursuant to applicable law and any court costs awarded by a court, but this cannot include the attorney’s fees. Or they can deduct a reasonable amount necessary to repair any damage caused to the property by the tenant. If this is the case, the landlord shall deliver to the last known address of the tenant, within 30 days, an itemized statement of the damages allegedly caused to the property and estimated or actual cost for repairing or placing the items on the statement. The landlord should attach copies of the paid receipts for the repairs. If an estimate is given the landlord shall furnish the tenant with copies of the paid receipts within 30 days from the date the statement showing the estimated cost was furnished to the tenant.

If the landlord fails to comply with these sections, the ordinance provides remedies for the tenant. Certain violations automatically allow the tenants to seek damages in an amount equal to two times a security deposit plus the attorney’s fees, while other violations require the tenant to provide a notice to the landlord with an opportunity to cure the breach before awarding damages.

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