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 rental agreement security deposit interest rate is set at 0.01% from January 1, 2023 through December 31, 2023.
Here is the direct link to the English announcement: https://www.chicago.gov/city/en/depts/fin/supp_info/interest_rate_onrentalsecuritydeposits.html
Here is the direct link to the Spanish announcement: https://www.chicago.gov/city/en/depts/fin/supp_info/interest_rate_onrentalsecuritydeposits_Spanish.html
Here is the direct link to the security deposit interest rate lease addendum: https://www.chicago.gov/content/dam/city/depts/doh/general/secdep_2023.pdf
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 the security deposits, evictions, leases, tenant screening, and other landlord legal issues? Our experienced landlord/tenant attorneys are here to help.
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