Each year the City of Chicago Comptroller is required to review and set the rate of interest to be paid on security deposits for residential lease agreements.
From January 1, 2020 through December 31, 2020, the security deposit interest rate is set at 0.01% (unchanged since 2015).
Remember: the Chicago Residential Landlord and Tenant Ordinance (CRLTO) requires that the latest Security Deposit Interest Rate Summary be included with any lease or lease renewal.
This summary is also available on the City of Chicago website.
While the interest rate is minimal, every landlord should be aware of the potential penalties if they fail to pay tenants for the interest earned annually.
For example, if a landlord collects a security deposit for $1,000.00, the landlord will owe $0.10 in interest to the tenant every 12 months.
Pursuant to the Chicago Residential Landlord and Tenant Ordinance (CRLTO), a landlord is obligated to pay interest to the tenant on monies held for six (6) months or more, no later than 30 days after the end of each 12-month rental period.
If the landlord fails to pay out the interest earned, regardless of the amount, the landlord could be responsible for not only the return of the security deposit in full, but also for damages equal to two times the deposit plus interest, attorney fees, and associated court costs.
It is imperative that landlords understand that money accepted as the security deposit still belongs to the tenant. The landlord is only “holding” the money in the event of potential damages, and can only draw from the deposit after the tenant has vacated the unit and an itemized statement of damages has been issued. Therefore, the deposit and any interest earned belong to the tenant for the duration of the lease term.
Want more information about security deposits, a landlord’s legal requirements, or the Chicago Residential Landlord and Tenant Ordinance (CRLTO)? Download two free booklets prepared by KSN attorneys: Illinois Landlord & Tenant Law and the Landlord & Tenant Eviction Handbook.
Questions? Our experienced attorneys are here to help. Call KSN toll-free at 855-537-0500 or visit www.ksnlaw.com.
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