This article provides a brief summary of several new laws enacted in 2025 that affect Illinois landlords and rental property managers. Because each property and situation is unique, landlords should consult with their legal counsel to determine how these changes may specifically apply to their operations.

KSN is proud to serve as a legal resource for Illinois landlords and rental managers navigating these evolving regulations. Questions about these Illinois legal updates, leases, evictions, tenant screening, and other landlord legal issues? Our experienced landlord/tenant attorneys are here to help.

Call KSN toll-free at 855-537-0500 or visit www.ksnlaw.com/landlord-and-tenant

Retaliation Protections

Landlord Retaliation Act – Public Act 103-0831 prohibits Illinois landlords from retaliating against tenants who engage in protected activities. This state law, modeled after a provision in the Chicago Residential Landlord Tenant Ordinance (RLTO), is applicable to all rental properties in Illinois and aims to safeguard tenants’ rights and promote fair treatment.

Effective January 1, 2025, the law specifies that landlords cannot terminate a tenancy, refuse to renew a lease, increase rent, or take other adverse actions if a tenant has exercised certain rights.

The law establishes a presumption of retaliation if a landlord’s adverse action occurs within one year prior to the tenant’s protected activity. Landlords should work with their legal counsel to review their policies and train their rental property teams to avoid retaliatory practices.


Tenant Screening Reports

Landlord-Tenant Credit Report – Public Act 103-0840 introduces changes to how tenant credit reports are handled during the rental application process. Effective January 1, 2025, this law allows prospective tenants to submit reusable credit reports, eliminating the need for multiple credit checks and the associated fees. Key requirements for these reusable reports include:

  • Timeliness: The credit report must be prepared within 30 days of submission.
  • Accessibility: It must be directly available to landlords or accessible via a third-party website compliant with state and federal regulations.
  • Cost-Free Access: Landlords must access these reports at no cost.

The law’s intention is to reduce financial burdens for tenants while maintaining the landlord’s ability to evaluate applicants’ creditworthiness effectively. Illinois landlords and rental property managers should update their application processes to incorporate these changes and ensure compliance with the new legal requirements.


Process Serving

CIV Pro-Process Servers – Public Act 103-0671 modernizes the methods for serving legal process in civil cases. Effective January 1, 2025, this law permits the use of licensed private detectives for serving process in all counties in Illinois, providing an alternative to the previously required sheriff’s service in Cook County. The hiring party must pay the Sheriff a minimal fee for this alternative service method.

The law’s intention is to streamline the process serving procedure, particularly in cases where timing is critical. Illinois landlords involved in legal disputes should be aware of this option and consult with their legal counsel to determine the best approach for serving process efficiently and in compliance with the law.


Tenant Payment Options

Landlord/Tenant-Additional Fee – Public Act 103-0809 addresses tenant payment methods and associated fees. Effective January 1, 2025, this law requires Illinois landlords who use third-party payment portals to also provide tenants with the option to pay by check or cash without incurring a transaction fee.

The law’s intention is to ensure tenants are not forced to use digital payment methods exclusively, which may carry additional costs.

Landlords should update their payment policies to accommodate these requirements and ensure tenants have fee-free payment options.


Landlord/Tenant Flood Disclosure

Illinois Public Act 103-0754 introduces new requirements for landlords and rental managers to ensure transparency regarding flood risks associated with rental properties. This legislation is effective January 1, 2025, and mandates landlords to disclose in writing specific flood-related information prior to the execution of any lease. Key elements of the disclosure include:

  • Flooding History in Lower-Level Units: Landlords must inform prospective tenants if any lower-level unit has experienced flooding within the past 10 years. This ensures tenants are aware of potential vulnerabilities in areas prone to water damage.
  • Knowledge of Property Flooding: Any actual knowledge of flooding incidents affecting the property or parking areas must also be disclosed. This provision emphasizes transparency, requiring landlords to share their awareness of prior flooding events, even if they were isolated incidents.
  • Federal Emergency Management Agency (FEMA) Special Hazard Flood Zone Areas: If the property is located in a FEMA-designated Special Hazard Flood Zone, landlords are obligated to notify tenants. This information allows tenants to understand potential risks tied to natural disasters and consider additional protective measures like renter’s insurance.


New Illinois Laws Impacting Landlords with Employees

  • Minimum Wage Increase – The new minimum wage law, originally passed in 2019, will continue its phased increase with a significant adjustment starting January 1, 2025. Illinois’ minimum wage will rise to $15 per hour.
  • Equal Pay Act Amendment (HB 3129) – This new Illinois law mandates that employers with 15 or more employees include pay scales and benefits in all job postings. This new requirement promotes transparency in hiring practices and helps address wage disparities.
  • Worker Freedom of Speech Act (SB 3649) – This new law prohibits employers from retaliating against employees who choose not to participate in meetings discussing religious or political matters. This law safeguards employees’ rights to make personal decisions without fear of adverse consequences in the workplace.


2025 State of Illinois Security Deposit Interest Rate

As noted on the Illinois Department of Financial and Professional Regulation website:

“The Illinois Department of Financial and Professional Regulation, Division of Banking announced today that the interest rate paid by the largest commercial bank with its main banking premises in Illinois on minimum deposit savings accounts as of December 31, 2024 was 0.005% with an Annual Percentage Yield (APY) of 0.01%.

The Security Deposit Interest Act (765 ILCS 715) requires that “the lessor of residential real property, consisting of 25 or more units, pay interest to the lessee on any security deposit held for six months or more. Interest must be paid to the lessee in cash or in the form of credit towards rent within 30 days after the end of each 12 month rental period at a rate equal to the interest paid by the largest commercial bank in Illinois on minimum deposit passbook savings accounts as of December 31 of the calendar year preceding the inception of the rental agreement. This Act does not apply to deposits made with respect to public housing, nor to a lessee who is in default under the terms of the lease.”


2025 City of Chicago Security Deposit Interest Rate

  • As announced on the City of Chicago website, the rental agreement security deposit interest rate is set at 0.01% from January 1, 2025 through December 31, 2025.
  • Here is the direct link to the 2025 announcement: https://www.chicago.gov/city/en/depts/doh/provdrs/landlords/svcs/security-deposit-interest-rates.html
  • 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.


Legal Resource

Non-compliance with these new 2025 landlord/tenant laws could lead to legal ramifications, fines, and litigation. Illinois landlords and rental managers should familiarize themselves with these updated legal requirements and proactively integrate them into their leasing processes.

Questions about these Illinois legal updates, leases, evictions, tenant screening, and other landlord legal issues? Our experienced landlord/tenant attorneys are here to help.

Call KSN toll-free at 855-537-0500 or visit www.ksnlaw.com/landlord-and-tenant

Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We represent thousands of clients and community associations throughout the US with offices in several states including Florida, Illinois, Indiana, and Wisconsin.

 

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