Pursuant to the Chicago Residential Landlord and Tenant Ordinance (CRLTO), a landlord is obligated to pay interest on monies held (for six months or more) to the tenant within 30 days after the end of each 12-month rental period by cash or credit to be applied to the rent due. For 2017, the City Comptroller has set the interest rate for 2016 at .01%. The rate has remained at .01% since 2015.
You can view the City of Chicago website with security deposit interest rates here.
While the interest rate is minimal, every landlord should be aware of the potential penalties if they fail to pay tenants the interest earned. For instance, if a landlord takes a security deposit for $1,000.00 at the beginning of this year, the landlord will owe $0.10 in interest to the tenant by the end of the 12 month lease term. But if the landlord fails to pay the interest earned, the landlord could be responsible for the return of the security deposit and potentially for damages equal to two times the deposit plus interest, attorney fees, and court costs.
It is imperative for all landlords to remember that the money issued as the security deposit still belongs to the tenant. The landlord is only “holding” the money in the event of potential damages. Therefore, the money and any interest earned belong to the tenant.
If you have questions about a landlord’s legal requirements or the Chicago Residential Landlord and Tenant Ordinance (CRLTO), our experienced attorneys are available. Call Kovitz Shifrin Nesbit toll-free at 855-537-0500 or visit us online at www.ksnlaw.com.
Landlords can also read two free booklets prepared by KSN attorneys, including our review of the Chicago Residential Landlord Tenant Ordinance (RLTO) and our Landlord & Tenant Eviction Handbook.
This article is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By reading this article you understand that there is no attorney client relationship between you and the article author. This article should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. © 2017 Kovitz Shifrin Nesbit, A Professional Corporation.