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.
As recently announced on the City of Chicago website, the security deposit interest rate is set at 0.01% from January 1, 2021 through December 31, 2021. The rate has remained unchanged since 2015.
It’s important for landlords to remember that 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.
Also pursuant to the 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.
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.
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.
Questions about security deposits, tenant leases, evictions, and other landlord legal issues? Our experienced attorneys are here to help. Call KSN toll-free at 855-537-0500 or visit www.ksnlaw.com.
Since 1983, KSN has been a legal resource for landlords, property managers, and property owners. We have four office locations, serving hundreds of clients and thousands of communities throughout Illinois, Indiana, and Wisconsin. Our attorneys are also licensed in Arizona, Florida, and Missouri.
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