“Cook County Residential Tenant Landlord Ordinance” – KSN Attorney Jessica Ryan discusses the Cook County Residential Tenant Landlord Ordinance (RTLO) and what steps need to be taken in order to be compliant with the ordinance. (60 mins.)
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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.
For more info about our law firm and legal services, please visit www.ksnlaw.com.
Nikki: You are listening to the KSN podcast, and today we’re talking about the Cook County RTLO. Welcome to the KSN podcast where you’ll hear from KSN attorneys as they share their experiences and insights on legal issues surrounding community associations, collections, property tax appeals and landlord tenant law. I’m Nikki, and today we’re joined by KSN attorney Jessica Ryan. Jessi practices landlord tenant law as well as condominium, town home and homeowner association law.
Jessica: I’m Jessica Ryan. I’ll be presenting today’s webinar on the Cook County residential tenant landlord ordinance. There’s a lot to cover here, so I’m going to go through the most important sections and those that are similar to the most commonly violated sections of the Chicago RLTO cause those are probably going to end up being the most commonly violated sections in cook County as well, but feel free to contact me after the webinar if you have any more questions or concerns or if there’s a provision we didn’t get to that is really concerning too. I’d be happy to discuss with you. Let’s talk about the Cook County RTLO which was just adopted on January 28th, 2021, and it became effective on June 1st of this year. The ordinance is similar to the RLTO of Chicago. I think they really did that to us just to mess with us where Cook County is RTLO and Chicago is RLTO especially for those of us who are going to be giving presentations, just so that we can mix them up all the time.
So I’m going to do my best. I apologize if I swap the two here and there but the Cook County ordinance is similar to the Chicago RLTO in that it is extremely tenant friendly. It has numerous pitfalls for landlords and there are steep penalties against landlords for even the most minor violations. So for suburban Cook County communities, it is imperative that you form your procedures to the requirements of this new RTLO prior to June 1st, so that your leases, policies and onsite teams are all in compliance with the ordinance by its effective date, again, June 1st.
So let’s get started. So let’s talk about the properties that are covered by the RTLO. Like the Chicago RLTO, the Cook County RTLO is extremely broad and covers almost all residential rental property within the county’s limits. It applies to every residential dwelling unit with just a few exceptions, which we’ll talk about in just a moment. Really important to keep in mind, like the Chicago ordinance, the definition of a dwelling unit includes the residents as well as all of the common areas and all of the housing services, privileges, furnishings, and facilities supplied in connection with the use or occupancy of the apartment, including the garage and parking facilities. So every time that we talk about the dwelling unit in today’s webinar, and when you read that term in the Cook County ordinance for repairs, disclosures, everything we’re talking about, we’re talking about all of the building’s common areas and amenities, as well as the apartment. It’s a very, very broad definition of the term dwelling unit.
So the next I had mentioned that there are exceptions to the properties that are covered by the RLTO. So these properties are not covered by the Cook County ordinance. The most common exception is for owner occupied buildings of six units or less. A common misconception has been in Chicago with smaller landlords that it exists for all properties of six units or skewers, but that’s not the case. The exemption only applies when the landlord’s primary residence is a unit within the building. So, this is the exception for the sweet little lady who owns a three flat and she lives on the top floor and rents out the bottom two. She would not be subject to the Cook County RTLO. Another exception that’s different from the Chicago ordinance and does help out a little bit is for a single family home, including a single condominium unit provided that it’s the only residential unit leased by the owner, the owner or another immediate family member has lived in the unit for at least one month in the 12 months prior to the home being marketed for rent and the owner, not a management company, the owner personally manages the unit and that owner is not a corporation.
So this exception would apply to the single guy who gets married, buys a home, can’t sell his condo and has to rent it within a year of moving out. That’s a nice exception. It doesn’t exist in Chicago, and I know those single unit landlords really have some trouble complying with Chicago and get themselves in trouble. So that’s a nice carve out to have in suburban Cook County. The ordinance also creates exceptions for hotels, motels, bed and breakfast, where occupancy is less than 32 days, because then they’re subject to the vacation and hotel ordinances, and exceptions for hospitals, monasteries, homeless shelters, and dormitories. Properties under a real estate purchase or installment contract are also exempt as long as the seller or the purchaser is living in the unit. Finally, a unit that is occupied by an employee of the landlord when that occupancy is conditioned on employment at the property, like your apartment, the apartment manager or maintenance person who lives at the property, they would be exempt from the requirements of the ordinance. However, two important caveats to these exceptions: if the property is excluded from the ordinance, you have to make that exclusion known to prospective tenants in marketing materials and prominently on any application materials before you accept any application fees, credit check fees or holding fees.
So that’s important, that does not happen in Chicago. You have to make sure you have that disclosure on your initial packet to prospective tenants. The second caveat is that the lockout prohibition that’s contained in section 42 813, which is your general provision against landlord lockouts, illegal lockouts will apply to all dwelling units in Cook County. So if you have an employee living in a unit under the exception we just talked about that anti lockout provision will still apply to that employee.
Next, we’re to the next slide to talk about a proper RTLO lease. The ordinance covers oral and written leases for new or renewed tenancies. So now the requirements of the ordinance are really intricate and a handshake agreement almost immediately will subject a landlord to liability. So I very much recommend that all cook County landlords have written leases in place. Unfortunately in an hour, I don’t have time to go through all of the detailed requirements. So I do recommend that you consult with your attorney, contact my office to review your standard at least to confirm that it is in compliance. I will say this numerous times today, if you question how to comply with any section of the ordinance, do not hesitate to call me, email me, or reach out to your own counsel. So let’s talk about some of the prohibited lease terms. Section 42, 804 outlines numerous lease provisions that become unenforceable if included in a lease under the Cook County RTLO. Again, because of our time constraints, I can’t talk about every section. So I’m going to discuss the sections that mirror Chicago’s most commonly violated sections or sections that are new and seem to have some pitfalls that are concerning.
So again, don’t hesitate to contact me or your attorney for an entire lease review. First, if you fail to sign the lease, you will still be bound by its terms if you accept rent and it will have the same effect as if you signed it and delivered it to the tenant. On the flip side, if the tenant fails to sign the lease, but takes possession of the property and pays rent, then the lease again is in full force and effect as if the tenant had signed.
So I know I’ve had situations with clients where the tenant is saying there isn’t a written lease with all of the protections for the landlord, it’s just an oral lease because I didn’t sign it. Now we have a provision in suburban Cook County where if the tenant does not sign it, but takes possession and pays rent that lease will be in effect with all of its provisions. Second lease term is there’s a ban on any attorney fee provision that requires a tenant to pay the landlord’s attorney’s fees in any lawsuit arising out of the tenancy. So like Chicago, this extends to attorney’s fees arising out of an eviction lawsuit. So new for suburban Cook County, you will no longer be able to recover your attorney’s fees in your evictions. You’re also limited in the amount of late fees that can be enforced. It’s a complicated calculation. If you ever managed a property in Chicago, this will sound familiar. A late fee is limited to $10 per month for the first $1,000 in monthly rent, plus an additional 5% for any amount of rent over the initial thousand dollars.
So let’s kind of talk about that and break it down in a real life situation. So let’s say the monthly rent is $1,500. You would then charge a late fee of 35 bucks. How did I get to that? You would take $10 for the first thousand dollars in rent of your $1,500 monthly rent, plus you get another 5% of the remaining $500 in rent, which is $25. So you take the first $10 plus the $25 to get your $35 late fee on a $1,500 monthly rent. Finally, you can not apply rent payments to a charge other than rent including utilities, fines, or late fees. So if your tenant has an unpaid balance of utilities and late fees, you cannot take a new rent payment and apply it to the past due balance leaving that month’s rent unpaid. The check must be applied to the current rent and violations. If a landlord attempts to enforce a provision of the lease in violation of this section, the tenant can recover his actual damages or two months’ rent, whichever is greater plus attorney’s fees and court costs if they go to court.
So, similar to Chicago, I talked about these steep penalties that you’re going to see throughout this ordinance. Whenever there is a penalty available to the tenant that the landlord has to pay, the landlord is also going to be responsible for the tenant’s reasonable attorney’s fees. So be prepared for that. Those attorney’s fees can add up quickly, and sometimes it’s better just to pay the penalty than keep negotiating and negotiating with the tenant’s attorney and racking up the tenants attorney’s fees. Important to note here, the ordinance specifically states that these requirements and prohibited lease terms only apply to new rental agreements starting June 1st. So if you have a lease in effect now that doesn’t terminate until later in the year, any of the provisions that are in your current lease that might not be in compliance are still going to be enforceable. You have to be compliant for leases that start June 1st. We’ve had some discussion about this language in the ordinance, and what does that really mean, when does starting June 1st actually go into effect and I hate to say it, but I think it’s going to be applicable for any lease with a lease term starting June 1st or later.
So I know with 60 day renewals going out, some of you are already signing renewals with tenants, new leases with lease terms that start June 1st, and your lease that you are giving out to tenants right now might not be in compliance with the Cook County RTLO. That is something you’re going to want to get in compliance right away. For my clients using more form leases, we’re working on getting those updated as quickly as possible. If you do sign a non-compliant lease now, we will recommend that you have the tenant sign a compliant lease before they actually take possession on June 1st.
So let’s move on. We’ll talk about disclosures in the leases. First, you must disclose whether the tenant or landlord pays utilities in the lease which you really have to do anyway under the tenant utility payment disclosure act. So not a big change. However, if the tenant pays utilities directly to the utility provider or to the landlord, you have to disclose the annual estimated costs of service during the prior 12 months, and that disclosure has to be in the lease. Next, if you’re taking a move in fee instead of a security deposit, and when we get to all of the security deposit requirements, you may consider foregoing the security deposits and taking move in fees instead but if you do take a move in fee, you have to disclose an itemized list of the estimated costs that make up that move in fee in your lease. You must disclose in writing the name, address, and phone number of the owner or authorized person who manages the property and the person who is allowed to accept service of process and notices and demands. You have to keep this information current, the obligation extends to a new owner landlord, a successor landlord who might buy the property. That person will have to send out their information and so the easiest manner of compliance really is to simply include this disclosure on the face of the lease or in an addendum to the lease.
Next a new lease or lease renewal must contain a written disclosure of code violation and utility shutoffs. So this includes any municipal code violations during the 12 months prior to the tenancy for the unit or the common areas as well as any pending code enforcement litigation. If you have a code violation that’s up in court, you have to disclose that litigation with the case number and the list of cited violations in that case. In addition, you have to disclose any notice by the municipality or a service provider to terminate water, gas, electric, or other utility service to the unit or again, to the common areas. These obligations are also continuous and have to be updated throughout the tenancy if you receive a code violation.
Now, why when I was saying that was I emphasizing common areas so much? Because the scope of this section is not limited just to the residential unit or to common areas that are owned by the landlord. Even a landlord of a single condominium unit within a community association has to investigate and disclose any code violations or utility shutoffs in the common areas of the association building. Even though the landlord does not own that property. So, if you rent out your own old condo and you don’t know the association has some tuck pointing violations on the outside of the building, and you don’t disclose it, you would be in violation of this section and if you’re in violation the tenant can terminate their lease and recover one month’s rent or tenants actual damages, whichever is greater plus attorney’s fees and court costs. So it’s important to make sure that you get those disclosures investigated and included in the lease. In addition, you have to provide each tenant with a copy of the current approved US environmental protection agency, federal pamphlet on bed bug prevention, detection, and control. The city of Chicago has their own bed bug pamphlet, but in suburban Cook County, you’ll be using the US environmental protection agency pamphlet. And finally you must provide a summary of the RTLO ordinance with every new lease or renewal.
So we are waiting for the summary to come out. I know we’ve suggested some changes to that summary and we’re waiting for the final summary to be released. Now, if you don’t provide the name, address, and phone number of the owner or agent or the RTL0 summary, the tenant can serve a notice of the breach under which you’ll have two days to provide that disclosure or the tenant can terminate the lease within 30 days, and you’ll be liable for a fee of $200 plus attorney’s fees and costs. So it’s really, really important to make all of these disclosures and avoid termination or any of these fines. Notice of foreclosure. If the rental property is in foreclosure, and that means the foreclosure lawsuit has been filed by the lender. There’s a big difference between when the foreclosure complaint is filed and when the property actually goes to a foreclosure or judicial sale. We’re talking about the very, very beginning of the process when the foreclosure lawsuit is filed. If that has happened, the landlord must disclose the lawsuit in writing. So for any new leases, that disclosure should be attached to the lease as an addendum. However, this obligation is continuous and within seven days of being served with the foreclosure lawsuit, you have to provide written notice to all of the current tenants.
Now, interestingly not only does the notice have to be served on all tenants, but the ordinance reads that it must be served on anyone who consistently pays rent on behalf of any tenant. So, what constitutes consistent? There’s no real definition. It’s very vague as to who a person is that consistently pays rent but I do know in Chicago, the RLTO lawsuits often end in favor of the tenant. So my recommendation is to be safe, play it safe. If you know that someone else has paid rent on behalf of this tenant, they should get that notice as well. Don’t take any chances. Closure also about the foreclosure has to include the court where the lawsuit is pending, case name and number, and there’s a specific blurb that must be included in the legal disclosure about the ongoing legal obligations of both parties.
So let’s get to habitability. Section 42, 805C of the ordinance deals with habitability issues. The list of items that you must maintain in the property and around the unit are pretty straightforward. There’s really no surprises and you can also rely on the standards in your local municipal code for determining habitability. You must also maintain adequate heat in the unit which is defined in the RTLO. From September 15th to June 1st of each year, the temperature inside the unit must be at least 68 degrees from 8:30 AM to 10:30 PM, and at least 66 degrees from 10:30 PM to 8:30 AM. So sometimes that’s a change, by June 1st it does get warm, and yet you still have to make sure that you are providing heat. I know some older buildings are either on heat or on air conditioning, and really can’t do both at the same time and sometimes that does cause problems with tenant complaints in late May and in late September saying it’s too hot, but you have to keep the heat on to make sure that at night it maintains those temperatures. And also section 42, 801D outlines all of the landlords obligations regarding bed bugs and pest control and the requirements are very similar to the Chicago ordinance, but if you are unfamiliar, you should look through that section, it’s 42, 801D regarding your obligations for bedbug and pest control.
All right. We’re onto the next one to talk about tenant remedies. So if the landlord fails to comply with any of those habitability issues under the ordinance or certain disclosure requirements or it says any provision of the rental agreement, the tenant has the following options and it appears these options can be used in conjunction with one or another. It’s not an either or situation. So the first thing the tenant is able to do is deliver written notice to the landlord that states that the landlord has 14 days to fix the problem, or the tenant will withhold rent on the next rent payment date in an amount that reasonably reflects the reduced value of the premises. So, number one is withholding rent if they give you proper notice. The second option the tenant has is to, again, deliver written notice to the landlord that states the landlord has 14 days to fix the problem, or the tenant will terminate the lease and vacate within one month after the 14 days expires.
Now, of note here, if the tenant doesn’t move out within one month, then the notice is deemed withdrawn and the lease is in full force and effect. So number one, withhold rent. Number two, terminate the lease. The third option that the tenant has is to file a lawsuit to obtain an injunction order, meaning that’s an order that forces the landlord to do something or stop doing something or to recover damages for whatever the issue is. The tenant also has specific rights when it comes to a landlord’s failure to provide essential services like water and heat in the event of a fire or some type of casualty, or if there are minor repairs needed that are under $500. So just keep in mind, the tenant has abundant rights. It’s very, very important that you make the disclosures, maintain the property in accordance with the local municipal code and comply with the terms of your lease. Because if you don’t, the tenant could be entitled to withhold rent or terminate the lease, or even file a lawsuit. So really, really important that you’re familiar with all of the requirements and that you comply to avoid any of those remedies.
Nikki: Jessi is going to take a quick break, but when we get back, she will continue discussing the Cook County RTLO.
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Nikki: And we’re back. I’m here with attorney Jessica Ryan, and we’re discussing the Cook County RTLO.
Jessica: All right. Let’s talk about landlord access. Like in the Chicago ordinance, there’s a section in Cook County now governing a landlord’s right to access the residential unit. So there are numerous reasons in the ordinance why a landlord can enter but what you need to know really most importantly is that other than in the case of an emergency, you have to give the tenant two days’ notice, and it’s two days written notice of your intent to enter. And the ordinance says you have to give the written notice either by mail, telephone, or written notice at the unit. And that is not a mistake on my part, the ordinance actually states that you can give written notice by telephone. I’m not sure how that works. But it does say written notice. So I don’t think telephone is a viable option. And other than in emergency situations, you can only go in at reasonable times, reasonable being anytime between 8:00 AM and 8:00 PM or at any time that the tenant specifically requests. Now, in the case of an emergency circumstance, you can enter without giving notice, but then you have to give notice that you went into the unit within two days afterwards and a violation of this section results in a penalty equal to one month rent or twice any damages that the tenant actually sustains, and guess what I’m going to say, plus attorney’s fees and court costs. So I know most of my suburban clients generally give a 24 hour notice before accessing the property to make a repair and now you’re going to have to give two days’ notice. So it is a much longer period. Keep in mind though that you can enter at any time the tenant specifies.
So if the tenant says, “Oh, I need you to replace a handle on my cabinet. Can you guys get here this afternoon?” That is the tenant giving you permission to come in that day and waving that two day notice period but if it is a general repair that needs to be made, changing smoke alarm batteries, something like that, you will have to give the tenant two days’ notice. Renewal or termination of tenancy. So to terminate a lease now, you have to serve a written notice on the tenant that you do not intend to renew the lease. The lease does not just end on its own terms. You have to serve this notice on the tenants at least 60 days before the end of the lease. If you do not serve a notice of your intent not to renew and to terminate the lease at its end date, at least 60 days prior, your tenant gets to stay in the unit up to an additional 120 days, four months under the same terms and conditions of the lease, meaning at the same rent. Four extra months they get.
On the other hand, if you do want to renew the lease, you have to offer a renewal within 60 days before the lease ends. You cannot force a tenant to renew or sign a renewal more than 60 days prior to the lease end date. So looking at this from a practical setting, you may very well expect your tenant to renew the lease. So you give the proper offer of renewal more than 60 days out, but let’s say with only 12 days until the end of the lease, your tenant decides she doesn’t want to renew the lease. She refuses to sign that renewal, but now you can’t send the proper termination notice more than 60 days prior to the end of the lease because the least termination is only 12 days away. So in this case, you’re actually stuck and you have to serve a 120 day termination notice allowing the tenant that additional 120 days in the property at the same monthly rent.
Of course, if the tenant only wants 30 days, that’s fine. You can come to an agreement but I know Chicago tenants have a similar provision in their favor, it’s only for 60 days. It only gives them an additional 60 days, but those tenants who are familiar with that often use that to their favor just to gain an additional few months at the same rental. So I imagine we may see that among educated and informed cook County tenants as well. So you definitely want to be careful with these 60 day periods and whether you’re going to renew or terminate and not renew. Let’s go on to the next one. The RTLO also incorporates a recent amendment that was made to the Chicago RLTO in that a tenant has a one-time right in the case of an eviction lawsuit to pay all unpaid rent, filing fees and court costs, but not attorney’s fees prior to entry of an eviction order and stay in the property. If the tenant makes such a payment, the landlord must accept it and the case will then be dismissed.
So this is a situation where, and right now it’s really bad to try and discuss evictions, but let’s say it’s normal times with evictions in the courts and we have filed the eviction for nonpayment, the tenant hasn’t paid in six months. They file a jury demand. We are four months into litigation. They have filed motions. We have had hearings we have gone through four or five different court dates and drafted different pleadings and responses to different motions because of their jury demand, and now they’re eight months behind in rent, we are a week away from a jury trial and the tenant comes up with all of the past due rent plus the filing fees and the court costs for service, but no attorney’s fees. You have to accept that payment. The case will be dismissed and the tenant gets to stay in the property. Even though you are probably out over $10,000 in attorney’s fees, you have to keep that tenant.
So you just have to be very, very careful. If you have a problem tenant who is also delinquent in rent, it was often our advice, let’s go with the delinquency. It’s a black and white issue. It’s much easier for us to get our eviction order. And again, I am talking about normal times, not during COVID and the pandemic because the eviction courts are a mess right now but we would also often say, even though they’re a problem tenant, let’s go the unpaid rent because we can get them out, and if they don’t pay in the five days of the five day notice you get your eviction order, no matter what. Now the tenants have this opportunity to make payment in full of their past due rent, plus just the filing fee and the service fees to be able to stay in the property. So we’re going to have to look at these a little more carefully when you have a problem tenant who is also delinquent to determine if it might make more sense to go forward on their conduct issues and serve a 10 day notice that includes nonpayment so that we take away that opportunity for them to pay and stay when they’re really a problem to other tenants in the property and causing a lot of disruptions. So that’s the pay and stay. That’s big, that’s new for suburban Cook County and it’s really, really important to understand for accepting payment during an eviction case.
All right, let’s talk about security deposits. So this area is the most highly litigated and most commonly violated section of the Chicago RLTO, and I’m sure it will become just as highly contested in the Cook County ordinance as well. So I’m going to spend a little bit of time on security deposits and make sure everybody understands what their requirements will be. Different from Chicago, this is a first in Illinois. Suburban Cook County properties will now have a cap on security deposits of one and a half months rent. So I repeat, you cannot take a security deposit in excess of one and a half months rent. Generally, I know a lot of security deposits are twice your rent. That’s your security deposit. No longer the case, one and a half months rent and if you take a security deposit greater than one month rent, the tenant has the option to pay the balance, the remainder in up to six monthly installments at the beginning of their lease term. So, let’s say you have $2,000. Am I doing this right? No, $1,000 monthly rent — got to do my math, was not meant to be an accountant. There’s a reason I’m a lawyer, not an accountant.
If you have a thousand dollar monthly rent and you want to take one and a half months rent for your security deposit and you’re taking a $1,500 security deposit and the tenant doesn’t have it all, the tenant has the right to pay a thousand dollars and then the remaining 500 in six monthly installments at the beginning of the lease. So that’s going to be a huge change for onsite policies and procedures. Also, you have to provide a proper receipt. So when you take a security deposit, you have to provide the tenant with a written receipt, which must be in writing, that contains the name of the person who received the deposit, the date when the deposit was received, and a description of the rental unit. Description of rental unit merely means the address of the unit.
Now, if the security deposit was given to the landlord’s agent or a property manager, then the receipt must also identify who the landlord owner is and finally the tenant must sign the receipt. So even if you have an oral lease, maybe with a good friend or a family member, you have to give a security deposit receipt and they have to sign off on it. In the case of an electronic funds transfer, so let’s say they’re making a payment of the security deposit on your web portal, you can actually give an electronic receipt right now with a tenant’s digital signature. So that does help a lot, as far as the security deposit receipt goes for those landlords who have a system of automatic deposit set up. So once you accept the security deposit and give a proper receipt to the tenant, the deposit must be held in a bank savings and loan association or other financial institution located in the state of Illinois, and the funds cannot be commingled with the landlord’s funds in any way. The only exception to the co-mingling prohibition is that you can accept payment of the first month’s rent and the security deposit in one check or one electronic funds transfer as long as within seven days you transfer the amount of the security deposit into the separate account that meets the requirements of the ordinance.
So just a little comment on commingling, I’m sure most of you know this and are aware, but the security deposit is actually not your money. That money is the tenants money. So that security deposit through the entire lease is the tenant’s money, and you are merely holding it on behalf of the tenant, which is why you cannot commingle that money with your funds. The concern would be if your funds are accessible by any debtor who is going after you the legislators do not want a debtor of one of your debtors to get ahold of the tenants funds. So that’s why the security deposit must be held in a separate account and cannot be held with the monthly rent payments, which are your property, as soon as the tenant makes payment of those.
Now, you also have to include in your lease the name of the financial institution where the security deposit will be held. In Chicago, you have to disclose the name and address of the financial institution in the state of Illinois. I think Cook County smartened up a little bit with all of our large national chain banks. It really meant nothing for a landlord to put the address of the local branch of Wells Fargo in the lease, it didn’t have the meaning that it would have had 50 years ago. So here now in cook County, suburban cook County, you only have to write the name of the financial institution, where the security deposit will be held, and if you transfer the security deposit from one bank to another, you have 14 days to provide notice of that transfer and the name of the new bank to the tenant. So now let’s talk about selling rental property and what happens with the security deposit. So when you sell your rental property, the security deposit obviously has to be transferred from the selling landlord to the purchasing landlord. The buyer who’s technically called the successor landlord has to notify all tenants in writing within 14 days of the purchase that he now has the security deposits, and that notice has to contain the owner or managing agent’s name, address, and phone number.
So that is the purchaser, the person who is buying the rental property has to give notice that he’s the new owner within 14 days of the sale. On top of that, the seller, the outgoing landlord, has to also provide written notice to the tenant within 10 days of the sale. Can’t both be 14 days, that would be too easy. Seller has 10 days to provide notice of the sale and the notice has to state that the security deposits have been transferred and the notice has to include the name, address, and phone number of the new landlord or their managing agent. If the seller does not provide this notice, the seller could remain liable for the security deposit along with the new landlord. So that’s really, really important if you’re selling a rental property to make sure that you give notice within 10 days of the sale, because five years down the road, when one of your tenants moves out and the new landlord that you sold to fails to return his security deposit like he’s supposed to, you could be on the hook for all of the violation penalties, simply because you didn’t send notice out 10 days after the sale. So really, really important to insulate you from liability. So interest, surprisingly there’s no requirement for payment of security deposit interest under the Cook County ordinance like there is in Chicago.
So you are still only subject to the requirements of the Illinois security deposit return act. So I’m not saying you don’t have to pay interest. I’m saying there are no additional requirements in the Cook County ordinance. You and your properties would still be subject to the Illinois statute regarding security deposit interest. So if you’re unfamiliar with the Illinois statute or have questions whether it applies to certain situations, don’t hesitate to give me a call or send me an email or of course talk to your own counsel. So return the security deposit. So the lease is up, you have to return the security deposit to the tenant. You have 30 days to return it after the tenant vacates, after the tenant vacates, not necessarily from the lease termination date. The 30 day clock starts when the tenant vacates the property.
So if they move out five days before the lease actually ends, you’re supposed to start counting your 30 days for a security deposit return from that day they moved out. If there is unpaid rent, wrongfully withheld rent, damage to the property, you can deduct those amounts from the security deposit as long as you do the following procedure. If repairs are needed, you have 30 days after the tenant vacates to give the tenant an itemized statement of the damages and a list of the actual or estimated cost for the repairs and copies of the receipts for any work that was actually done. Now, if the repairs cannot be done in those 30 days, you can provide estimated costs for the work, and then you have an additional 30 days after that to get it done and provide the actual receipts. So the total time frame is only 60 days from the time they move out to get all of your repairs completely done and provide actual receipts.
So it’s important if your tenant caused a lot of damage to your unit to get in there right away, get your contractor’s in, get your estimates done, send the estimates to the tenant within 30 days and make sure all of the repairs are actually done within the following 30 days within a total time of 60 days to send the actual receipts to the tenant. If you do not have the work done, and you do not have actual receipts within 60 days of the date of move out, you are not allowed to withhold those amounts from the security deposit. So really important not to sit in the unit and I know most of you would never do that. You have to get it re-rented, but I have had situations where a landlord was out of the country for the first three weeks after the tenant vacated and didn’t get started until almost the 30 day date and found themselves in a situation where they couldn’t get it done. So really, really important to be on top of that.
All right. So let’s talk about breach of the security deposit provisions. So remedies, what happens when you breach these security deposit provisions? So there’s a couple of different remedies for the tenant. A couple of the provisions when you breach it, they get their penalty, no matter what. In some of the other provisions, you get a chance to correct the mistake. So if you as a landlord take a security deposit of more than one and a half months rent, if you refuse to allow the tenant to make any part of that deposit, over a thousand dollars in an installment plan, or if you don’t comply with the requirements for returning the security deposit. So those three violations, the tenant gets to recover two times the security deposit, plus attorney’s fees, no questions asked. This award is considered a strict liability. That means the landlord is liable for that penalty no matter what the circumstances were. If there’s a violation, the landlord’s liable even if it was a mistake, if it was inadvertent, if the landlord didn’t really understand the lot, it doesn’t matter.
So going over the cap on security deposits, not allowing the tenant to pay over a thousand dollars in installments and not properly returning the security deposit, those three, you are going to be liable for two times the security deposit plus attorney’s fees, no matter what. For breaches of any of the other provisions, the tenant has to give you two days’ notice to correct the mistake, and it’s two days’ written notice. If you don’t correct the problem within two days from that written notice, then again, you’ll be liable for two times the security deposit plus attorney’s fees. So that’s a very, very short amount of time. You need to be on top of communications from your tenants. Sometimes I recommend that landlords have a separate email address just for communications with their tenants so that a tenant communication does not get lost in spam you can imagine if you’re taking a $1,500 security deposit and you have some small inadvertent mistake, let’s say you transfer the security deposit to a new bank and you forgot to let the tenants know that, and you miss the tenants written notice that says you have two days to tell us where my security deposit is, and you just missed it because you have a bunch of emails in your inbox, you would be liable to that tenant for $3,000. So small mistakes, big penalties. You don’t want to miss a notice from a tenant, and two days is not much time to get something back to them in writing.
So that’s security deposits. I’m going to just kind of conclude now. The Cook County RTLO, is really very, very technical. There’s a lot to take in, I know. For those of you who have been sitting comfortably in your cook County properties, in your suburban management offices, kind of thumbing your nose at your Chicago counterparts, I think it’s coming to haunt you now, you can’t laugh so much at the poor Chicago on-site managers who have been dealing with the RLTO, cause now this cook County RTLO is very, very similar and you got to get up to speed on it and get in compliance. There are definitely methods of protecting yourself, of getting your lease into compliance. Don’t hesitate to call me if we’re not able to get to some of your questions to do a lease review, get some practical advice on your day-to-day procedures. All right. I want to thank everybody for joining today and I appreciate your time. I hope it was informative, and please give me a call, send me an email if you have any follow-up questions. I appreciate it very much. Have a great day.
Nikki: That was KSN attorney Jessica Ryan. She practices landlord tenant law, as well as condominium, townhome and homeowner association law in the city of Chicago and surrounding suburbs. KSN is an experienced legal resource ready to provide you with quality advice and exceptional service. We look forward to demonstrating how we have earned the trust of thousands of clients over the past 35 years. If you’d like to reach Jessi or any of KSN’s experienced attorneys, please call (855) 537-0500. You can also visit ksnlaw.com and complete the contact form to send us a message. Thanks for listening.
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Please note the material contained on the KSN Podcast is for informational purposes only and does not constitute legal advice. No attorney-client relationship is established by your review or receipt of the information contained on the KSN Podcast. You should not act on the information discussed on the KSN Podcast without first obtaining legal advice from an attorney duly licensed to practice law in your State. While KSN has made every effort to include up-to-date information on The KSN podcast, the law can change quickly. Accordingly, please understand that information discussed on the podcast may not yet reflect the most recent legal developments. Material is not guaranteed to be correct, complete, or up to date. KSN reserves the right to revise or update the information and statements of law discussed on the podcast at any time, without notice, and disclaims any liability for your use of information or statements of law discussed on the podcast, or the performance of the podcast generally. The KSN Podcast may be considered advertising in some jurisdictions under applicable law/s and/or ethical rules/regulations. © 2022 Kovitz Shifrin Nesbit, A Professional Corporation.