“Breaking Down the Cook County Tenant Landlord Ordinance (RTLO)” – KSN attorney Jessica Ryan discusses the Cook County Tenant Landlord Ordinance (RTLO). She reviews best practices and steps that need to be taken by landlords and property managers in order to be compliant with the new 2021 ordinance. Jessica discusses proper lease terms, liability concerns, and more. (51 mins.)

The KSN Podcast examines various aspects of association law, landlord/tenant issues, property tax appeals, and more. In each episode, KSN attorneys share their experience and knowledge as they discuss legal updates, best practices, industry trends, and more. KSN Podcast episodes are available at www.ksnlaw.com/podcast.

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 have multiple office locations, serving hundreds of clients and thousands of communities throughout Illinois, Indiana, and Wisconsin.

For more info about our law firm and legal services, please visit www.ksnlaw.com

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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, collectionslandlord/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.

 

Episode Transcription

Nikki: You’re listening to the KSN podcast and today we’re talking about the Cook County residential tenant landlord ordinance. Welcome to the KSN podcast where you’ll hear from KSN attorneys as they share their experience and insight 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. Jesse practices landlord tenant law, as well as condominium, townhome and homeowner association law. Please note that this is a previous seminar recorded on April 27th, 2022.

Jessica: Hi, everybody. Welcome to today’s webinar. We’re going to be talking about the Cook County TLO. I’m Jesse Ryan. I’ll be presenting today’s webinar, kind of covering everything on the Cook County residential tenant and landlord ordinance, everything you need to know. There is a lot to cover here. I’m going to go through the most important sections and those that are most similar to the ones that are violated the most often in Chicago, which we assume are going to be the problem ones in Cook County as well. But if there are any topics that I don’t have time to hit, or that I don’t go into enough detail about, absolutely feel free to reach out and I’ll answer any questions that you might have. Quick disclaimer, this is not legal advice, it’s a presentation for informational purposes and as everybody is aware the landscape is constantly changing, especially because of the pandemic and post pandemic. So, I hate to say this, but anything I say today may not apply tomorrow. That is what I got used to saying during the pandemic because things changed so rapidly.

So before you actually apply anything we’re going to go over today, please make sure that it is still applicable and being enforced the same way. The other thing that I will say that’s not part of the disclaimer slide, but is relevant to the Cook County RTLO and I will repeat this probably throughout the webinar a few times is that the ordinance is fairly new and there has not been any case law that interprets the ordinance yet. So nobody has filed an appeal on an issue involving the Cook County ordinance that has gone up to the appellate court to say, this is how it should be enforced, this is how it should be interpreted. And without that type of guidance, all of us attorneys are working with the ordinance, working with the plain language of the ordinance and advising our clients that way but there is definitely room for interpretation. There are many gray areas in the ordinance and until we get some guidance from the appellate court these gray areas will kind of remain and we’re all doing the best we can to guide our clients in the best route and the route of least risk, which is one of my main jobs, risk manager for my client.

All right. So let’s talk a little bit about the history and a little introduction to the ordinance. The Cook County RTLO residential tenant and landlord ordinance was adopted on January 28th, 2021 and it became effective June 1st, 2021. So enforcement began on June 1st, 2021. The ordinance is really similar to the RLTO, the residential landlord and tenant ordinance of Chicago in that it’s extremely tenant friendly. It contains numerous pitfalls for landlords, and there are steep penalties against landlords for even the most minor violations. So for suburban Cook County communities, it’s imperative that you conform your procedures to these new requirements so that your leases, policies, your onsite teams are all in compliance with this ordinance. So let’s get started, let’s talk about some of the details of the ordinance so that you guys can make sure that you are all in compliance. Properties covered by the RTLO; like the Chicago ordinance, the Cook County RTLO is very, very broad and it covers almost all residential rental property within the county’s limit. It applies to every residential dwelling unit with just a few exceptions which we will talk about and keep in mind that the definition of a dwelling unit includes the residents, as well as the common areas and all housing services, privileges, furnishings, and facilities supplied in connection with the use or occupancy of the apartment and it specifically states including garage and parking facilities.

So every time we talk about the dwelling unit today in connection with the Cook County RTLO, when we’re talking about repairs, disclosures, things like that, we are talking about all of the building’s common areas and amenities in addition to the apartment itself. So keep that in mind. So exceptions to the properties covered by the RTLO; the first and really most important caveat that actually don’t have as a bullet point, but it has kind of been finalized and made more concrete in the last few months is that the Cook County RTLO provides an exemption for municipalities in Cook County that have a very robust ordinance that governs the landlord relationship. So, I’m involved in the Chicagoland apartment association, we have an attorney group that we formed actually during the pandemic and we look at all the different ordinances and all the different municipalities in Cook County and kind of try and determine if there are any ordinances that really meet the requirements for the Cook County exemption and obviously Chicago has, it’s a municipality within Cook County, but it has its own RLTO that is very robust.

Chicago properties will not be subject to the Cook County RTLO. So if your property is in Chicago, you will always follow the Chicago RLTO and not the Cook County RTLO. I think they did those letters just to mess with us who have to present it and talk about it. Then we have a couple of suburbs that have pretty sufficient and full ordinances and those are Evanston, Oak Park and Mount Prospect. Oak park actually came out and adopted its own ordinance that mirrors Cook County. I mean, they basically took Cook County’s ordinance and adopted it into their own municipal code with just a few minor changes here and there. But for the most part, the Oak Park ordinance is almost identical to Cook County, but it does have its own ordinance now that has been adopted into their municipal code. Evanston for a long, long, long time has had a landlord tenant ordinance. It covers many aspects of the landlord tenant relationship. So we believe the Evanston ordinance makes Evanston properties exempt from the Cook County ordinance and then Mount prospect, very similarly their ordinance doesn’t go back quite as far as Evanston, but it is very thorough and covers all areas of a landlord tenant relationship. So we believe Mount prospect would also be exempt from the Cook County ordinance.

So if you are in Chicago, Mount prospect, Evanston, you would be following the ordinances in your own jurisdiction and not following the Cook County RTLO. Now other exceptions that the Cook County RTLO has established, and the most common is for owner occupied buildings of six units or less and a common misconception here is that this exception exists for all properties of six or fewer units, but that is not the case. The exemption only applies when the landlord’s primary residence is a unit within the building. So, this is an exception for Mrs. Smith who owns a three flat, and she lives on the top floor and rents out the two lower units. She would not be subject to the RTLO and those two rental units below her would not be subject to the RTLO. Another exception, which is actually different from the Chicago ordinance 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 an immediate family member has resided in the property for at least one month in the 12 months prior to the rental and the owner, not a management company, personally manages the unit and last that the owner or the title holder of the unit is not a corporation.

So if there is a small single landlord who meets those criteria, that single family home, or that condominium unit would not be subject to the Cook County RTLO. So, this exception applies to the single guy who gets married, buys a home with his family, but he can’t sell his condo so he has to rent it and he rents it within a year of moving out from that condominium. That unit would not be subject to the RTLO. The ordinance also creates exceptions for hotels, motels, bed and breakfasts where occupancy is less than 32 days and hospitals, monasteries, homeless shelters, and dormitories. Properties under a real estate purchase or installment contract are also exempt from the RTLO as long as the seller or the purchaser is actually living in the unit. So if it’s a rental property with tenants in it, and it is being transferred from a seller to a purchaser, and neither of them live in the unit because it’s being transferred with an installment contract from one investment investor owner to another, that would not be exempt. But if it is like a rent to own situation where the people living in the unit have been renting it and are now going to do an installment contract for deed to purchase it, that property then would be exempt from the Cook County ordinance.

Now, there are two caveats to these exceptions. First, if the property is excluded from the ordinance, you have to make the exclusion known to prospective tenants in the marketing materials and on any application materials before you accept any application fees, or do a credit check fees or any kind of holding fees for the unit. So you have to disclose to your prospective tenants that they’re renting a unit that is not governed by the Cook County ordinance, and they do not have those protections that are granted by the ordinance. The exception to the exceptions if you have one of these exceptions and your property is not subject to the Cook County RTLO the other thing to keep in mind is that the prohibition on lockouts. That means a landlord cannot illegally lock a tenant out of the unit by changing the locks, shutting off heat in the winter, whatever it might be to illegally or wrongfully evict them from the unit. That prohibition will apply to all units in Cook County, even if they fall within one of these exceptions.

Another exception that, and I apologize, it’s the last bullet point here is if you have an employee whose tendency is contingent on their employment. So maybe you have maintenance personnel and they have a unit at the property and the agreement is as long as they’re your maintenance, they can live in that unit. So their tendency is contingent on their employment, that unit would not be subject to the RTLO. However, the prohibition on lockouts would still apply. You could not just change the locks on the maintenance person to oust them from the property.

So that is everything that is exempt and all of the exceptions under the RTLO. So now you know if your property is subject to the RTLO and now we have to talk about if it is, how does your lease comply? What constitutes a proper release under the Cook County ordinance? First, the ordinance covers oral and written leases for new or renewed tendencies. Now, the requirements of the ordinance are intricate and a handshake agreement like maybe you got away with 15 years ago will almost immediately subject the landlord to liability. I don’t have the time to go through all of the detailed requirements that make a Cook County lease in compliance. So I do recommend you talk to your attorney, ask me, we do have a Cook County compliance lease form that I can provide and if you have any questions, definitely, definitely reach out to me. I’m going to go through the most important provisions for a Cook County lease and the provisions that are similar to Chicago, that we see violated a lot but like I said, I can’t get through all of them.

So let’s start and let’s talk about prohibited lease terms. This is section 42-804 and it outlines numerous lease provisions that will become unenforceable if they’re included in a lease under the Cook County RTLO. Now first, if you fail to sign the lease, you will still be bound as the landlord. You’ll 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 and pays rent, then the lease is in full force and effect as if the tenant had signed. So, you may send a renewal lease to the tenant. They’ve been in there 12 months, you’re sending them lease that you want them to sign, they refuse to sign it, but they are still in possession in the new tendency period and they pay rent for that new tendency period, that renewal lease that you sent them would actually be in full force and effect as if it were signed. So that’s kind of a nice little extra provision that the ordinance provides. Second is 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, which is very new for suburban Cook County. In suburban Cook County, you have always been able to get your attorney’s fees in an eviction case, and now new for Cook County as of June 1st last year, you will no longer be able to recover your attorney’s fees in your evictions. You are also limited in the amount of late fees that can be enforced. It’s a complicated calculation if you aren’t used to it, or if you’ve never heard of Chicago’s calculation, it’s similar to Chicago. So here it is, a late fee is limited to $10 per month for the first $1,000 in monthly rent, plus an additional 5% of any amount of rent over a thousand dollars. So let’s kind of break that down. I’ll give you an example. Let’s say the monthly rent is $1,500, so you can charge $10 for that for the first thousand dollars in rent and then you’re going to take 5% of the amount of rent that’s over a thousand.

So if we had $1,500 in rent, we would have $500 which is over and above the first thousand and you can take 5% of the 500, which is $25 and you add that to the $10 you got for the first thousand and you come up with $10 plus 25, you get a $35 late fee. That is your calculation for late fees. You cannot charge daily late fees of five or $10. You cannot charge a flat late fee of a hundred dollars. I have seen it, it must be calculated and capped at this calculation. So you can either do it per lease and actually do the full calculation per lease. Or if let’s say you have three different rent amounts at your property based on the size of the unit, you could just take the lowest amount of rent at your property and let’s say it comes to the $35 and if you charge $35 for all of your units, even the ones that have higher rent, you’re going to be safe because you are not reaching the cap that is set by that calculation. So it’s up to you. I know I have properties who do not want to do that calculation with every single different lease that they put out. So they lose a little money with their late fees by doing it based on the lowest rent at the property, but it is a method if you don’t want to have the burden of calculating a late fee for each different lease.

Applying rent payments, you cannot apply rent payments to a charge other than rent, including utilities, fines, or late fees. So if your tenant has an unpaid balance, let’s say of utilities and late fees, you cannot take a new rent payment and apply it to that past due balance leaving rent for that new month either partially paid or unpaid. That check for that new month has to be applied to the current month’s rent. The only exception is if the tenant puts in writing in the memo of the check or in a letter that says this check is for my past due balance of utilities. Obviously you’re following the tenant’s wishes and you can apply that then to the past due balance. But otherwise you cannot apply rent payments for anything but that month’s rent. Now violations, if a landlord attempts to enforce a provision of the lease in violation of this section, the tenant can recover their actual damages or two months’ rent, whichever is greater plus their attorney’s fees and court costs. So that’s a steep penalty. If you miscalculate the late fee and we go into court and you’re trying to get a late fee that’s $10 over what you’re supposed to be getting and the tenant has a tenant’s rights attorney who figures that out and asks for a penalty of two months’ rent against you plus their attorney’s fees. So you really want to make sure you are not enforcing the prohibited lease terms if you have any.

There is one exception and one caveat to that which helps just a little bit, even though we’re kind of getting up to June 1st, 2022 here, the ordinance does say that these prohibited lease terms only apply to new rental agreements starting June 1st. So if you have a lease that was entered into or started before June 1st, 2021, these prohibited lease terms, you can enforce them. So, the idea is if you entered into a lease last March for a two year term, you couldn’t be responsible for prohibited lease terms in an ordinance that wasn’t effective yet. So you could enforce prohibited lease terms if your lease is a little bit older. The problem we’re seeing is that a lot of leases that had a June 1st, 2021 lease term start date were for one year, and here we are coming up to June 1st, 2022. So any reprieve that that caveat had given the landlord is about to come to an end for most 12 month leases that had started June 1st, 2021. So just make sure any renewals that you are entering into, any new leases that you are entering into now do not contain these prohibited lease terms and are in compliance.

All right. So also with a proper RTLO lease, there are some required disclosures. First, you have to disclose whether the tenant or landlord pays utilities in the lease and this is something you really have to do anyway, under the tenant utility payment disclosure act of Illinois. However, if the tenant pays the utilities directly to the utility company or to the landlord, you have to disclose the annual cost of service during the prior 12 months in the lease. So, that is the number you will have to get from the utility company. If unknown, you are allowed to in your disclosure, you can check a box that says unknown or you can write out unknown, but if it can be shown that you could have easily figured out or found out from the utility company what the prior 12 months were then you should do so. Next, if you’re taking a move-in fee instead of a security deposit you have to disclose an itemized list of the estimated costs that comprise the move-in fee. This is a bit of a gray area. There is not a whole lot of definition or guidance in the ordinance as to what type of costs are acceptable to comprise a move-in fee. The ordinance does state that these costs have to be directly related to the tenants move in. So extra security, extra personnel materials to protect the elevator, things like that could be added into your move-in fee.

The ordinance also says specifically that routine maintenance and upkeep cannot be included in the move-in fee. So if you are repainting and cleaning carpets to turn the unit in order to prepare for the tenants move in, that cannot be included in your move-in fee, because those are routine maintenance and upkeep items. You must also disclose in writing the name, address, and phone number of the owner or person authorized to manage the property and the person allowed to accept service of process and notice and demand. You have to keep this information current, and the obligation does extend to a successor landlord, to a purchaser of the property. And so, the easiest manner of compliance is to simply include the disclosure with all that information in the lease or in an addendum to the lease and if you purchase a property, you should immediately provide a notice with all of your contact information to all of the tenants in the building. I assume you’d do that anyway if you want anybody to pay you rent. So, I hope you are giving your contact information but it is an ongoing obligation.

Next, a new lease or renewal must contain written disclosures of code violations and utility shutoff. So this includes any municipal code violations during the 12 months prior to the tendency for the unit or the common areas, as well as any pending code enforcement litigation with the case number and the list of cited violations. Now, you also 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 the common areas that occurred in the 12 months prior to entering into the lease. These obligations are continuous and have to be updated throughout the tenancy. So if you get served with a code violation during the tenancy, you are required to notify tenants of that code violation. You might also wonder why I very slowly and with emphasis said common areas, and that’s because the scope of this section is not just limited to the unit or to the apartment. It extends to all of the common areas of the building. So, even a landlord with a single condo unit, that’s an investment property. It doesn’t fit within those exceptions. So, it is subject to the RTLO, just to make that very clear.

I mean, if a landlord is renting out a condominium unit in a community association and doesn’t know that, let’s say, there’s a tuck pointing violation from eight months ago in the common areas of the association, that landlord could be in violation of this disclosure requirement. So it is very, very important that a landlord investigate and disclose any code violations or utility shutoffs in the common areas, as well as with the unit. Now, if you are in violation of any of those that I already stated, the tenant can terminate their lease and recover one month’s rent or the tenant’s actual damages, whichever is greater plus attorney’s fees and court costs. So if you fail to do that, the tenant has the right to just terminate their lease and get a penalty. Now the other things that you have to disclose that have a little reprieve in the tenant’s penalty, you have to provide the bedbug brochure from the EPA. It’s the federal EPA bed bug brochure. I know Chicago has issued its own bed bug pamphlet. That is not the one you use in suburban Cook County. You need to use the one that’s issued by the EPA, and you have to provide a summary of the Cook County RTLO with your lease.

Now, if you don’t provide either of those, the tenant has to give you a notice that allows you two days to correct the mistake. But if you don’t correct it, then they can terminate the lease in 30 days, and you’ll be liable for a fee of $200 plus attorney’s fees and costs. So those give you a little chance to correct a mistake before the tenant can terminate, but it’s only two days. So make sure your onsites are all trained if they ever get a notice from a tenant to take action on it right away, look at it right away cause the timeframe could be very, very small to correct the mistake before the penalty is set in. All right, notice of foreclosure, this isn’t as prevalent now as it was maybe 10 or 15 years ago but we still need to talk about it. So if the rental property is in foreclosure, that means a foreclosure lawsuit has actually been filed by the lender and there’s a big distinction between when the foreclosure lawsuit is filed and when the property actually goes to a foreclosure or judicial sale. We’re talking about the beginning of the process when the initial foreclosure Lawsuit is filed.

If that has happened, the landlord has to disclose the lawsuit in writing. So for any new leases, that disclosure should be attached to the lease as an addendum, however, like many things here, the obligation is continuance and within seven days after being served with a full foreclosure complaint, you have to provide written notice of the foreclosure to current tenants. Now, not only does the notice of foreclosure have to be served on all tenants, it has to be served on anyone who and I quote “consistently pays rent on behalf of any tenant.” So, what constitutes consistent? There’s no definition, who really knows. I will tell you the Chicago RLTO, if there’s a lawsuit under the RLTO, it often ends in favor of the tenant. So in Chicago, I tell my clients to take the least risky approach, and I am telling my Cook County suburban clients the same.

So in my opinion, if you know anyone who has ever paid rent on behalf of a tenant, send them the notice too. It’s just better not to take chances and to make sure that everybody and anybody who has paid rent on behalf of a tenant gets the notice. This disclosure has to include the court where the lawsuit is pending, the case name and number and then there is specific legal language that has to be included regarding the tenants and the landlords ongoing rights. So, it does tell the tenant that they have to continue paying rent, but they do have a right to a certain 90 day notice before their tendency can be terminated and things like that. Now, if you violate this section and you do not send out your notice of foreclosure, the tenant can serve a 30 day notice of termination of the lease, as well as recover$200 in damages plus their attorney’s fees and court costs.

Habitability, this is section 42-805C of the ordinance, and it deals with all habitability issues. There is a list of things that you must maintain in the apartment and related to the apartment that are pretty straightforward. No real surprises there and you can also rely on the standards in your local municipal code for determining what’s habitable and how things need to be repaired and what the standard is for repairing electrical and plumbing and things like that. Basically, if you are keeping the property in compliance with local building code, you should be fine. I mean, assuming that takes into consideration if your property’s grandfathered in and whatever that might be. You must also maintain adequate heat in the unit, which is defined actually in the RTLO specifically from September 15th through June 1st of each year, the temperature inside the dwelling unit has to be 68 degrees during the day from 08:30 in the morning, till 10:30 at night, and at least 66 degrees overnight from 10:30 at night through 08:30 the next morning. There is also a section here right after regarding bed bugs and the landlord’s duty to remediate and deal with bed bugs.

Interesting in the language of the Cook County ordinance versus the Chicago bed bug ordinance is that the Cook County ordinance implies that the entire cost of remediation will always be on the landlord. Now, it doesn’t really take into account if the tenants’ lack of upkeep and cleanliness problems are causing or contributing to the bed bug issue. However, I’m sure in all of your leases, there are standards for cleanliness and sanitary conditions for the tenant. The ordinance also states that the tenant has to keep the unit in a sanitary condition. So in my opinion, you can rely on those provisions to charge back some of the costs of bed bug remediation if you can actually establish with expert opinion from your pest control expert that the bedbugs are being caused by the way the tenant is keeping their unit.

So let’s talk a little bit about tenants’ remedies here for habitability. If the landlord fails to comply with any habitability issues under the ordinance or certain disclosure requirements that we talked about or any provision of the rental agreement, the 10 tenants have some options and this is what we call remedies. This is an action the tenant can take to make it right and take some action against the landlord if the tenant feels that the landlord is not doing what they’re supposed to be doing. Now these options, it appears they can be used in conjunction with one another. They are not written as either or in the ordinance. So it is possible that a tenant can combine some of these remedies and employ two or more remedies to try and take action against the landlord.

First, the tenant can deliver written notice to the landlord that states the landlord has 14 days to fix whatever the problem is, 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 that is the rent withholding. The tenant does not have the right,– if they say you didn’t fix the dishwasher in April, May 1st cannot come around and they don’t pay rent and they say, well, I’m not paying because you didn’t fix the dishwasher. They have to give you a 14 day notice that says you have 14 days to fix the problem, or I intend to withhold rent. Now, if you don’t fix the problem in 14 days, and they choose to withhold rent, that withholding has to reasonably reflect the used value of the premises. So let’s say they have a leak in their kitchen sink, kitchen sink works fine, bathroom sinks work fine, they have running water. They just have a leak and it’s dripping all the time and it’s a little bit annoying and they send you a notice and you can’t get a contractor up there in 14 days to get it fixed because there’s other emergencies maybe in the property and that 14 days goes by and come May 1st, the tenant withholds their entire $1,800 rent. Obviously that withholding does not reflect the reduced value of the property for a dripping kitchen sink.

So there are some ways to combat a tenant’s rent withholding. Don’t just assume that if a tenant says I’m withholding rent because you didn’t fix this that the tenant is in the right. We have some ways to combat those notices or just that withholding. The second remedy that the tenant has is very similar. In this remedy they can deliver written notice to the landlord, another 14 day notice that gives the landlord 14 days to fix the problem. If the problem is not fixed, the tenant has the right to terminate the lease and then vacate within one month after that 14 day notice expires. Now, the ordinance does specifically say that if the tenant doesn’t move out within one month after that 14 day notice, the notice is deemed withdrawn and the lease is in full force and effect. So again, if you receive a 14 day notice from a tenant that says if you don’t fix this in 14 days, I’m going to move out within 30 days thereafter. For whatever reason, you can’t get the repair done in that 14 days, but then it takes the tenant a month and a half to move out, you can consider that tenant a skip. They would be liable for rent through the remaining term of the lease or the date of rental, whichever occurs first because they did not properly terminate the lease.

So again, if that 14 day notice expires and the tenant moves out later than 30 days down the road, at the 30 day mark, the tenant’s notice is deemed withdrawn and their lease is in full force and effect and at that point, if they move out two days later, they’re a skip and they do not get the protection that that notice might have afforded them. So again, if you get these types of notice and you’ve got a dispute from the tenant, there might be some ways that we can combat these notices on these technical issues. All right, finally, the tenant has a right to file a lawsuit against you and either get money damages if they have personal property that’s been ruined because of a leak or whatever, or they can file what’s called an injunction and an injunction is where you’re looking for a court order to either make somebody do something or make somebody stop from doing something. So if the tenant wants you to fix their sliding glass door, they could file an injunction lawsuit asking the court to make you fix that sliding glass door. So those are the tenants’ remedies for general habitability maintenance and repair issues.

Now, the tenant also has some specific rights when it comes to a landlord’s failure to provide essential services. So if you are not providing heat or running water, then you only have a very short amount of time. I think it’s 72 hours from the tenant’s notice to get that corrected or the tenant again can withhold rent, find alternate housing that you may have to pay for or terminate their lease. In the event of fire or casualty, which makes the property uninhabitable the tenant also can terminate the lease as of the date of the fire or casualty, or if it’s repairable and you say you’re going to repair it, but then you fail to do so the tenant can terminate the lease as well if they were holding out for 30 days, hoping it was getting repaired and then it has not been repaired even 30 days down the road. If they can show you have not taken action to make repairs and begin to make it habitable they might be able to terminate their lease at that point effective the date of the fire or casualty. And then if there are minor repairs that cost under $500 and you do not fix it within 14 days, the tenant is allowed to make those repairs and then if they provide a receipt, a paid receipt, they can withhold that amount from their next rent.

There are some requirements that go along with that. They have to have bonded insured, certified contractors working on the property. If the water needs to be shut off or anything like that, they have to provide notice to other tenants. So they can’t just [say] I know a guy, I got a guy and he’ll fix it and not give you a receipt and pay the guy cash under the table and you don’t know who this guy is and he was working on your plumbing on the stack that goes up five floors. That is not okay. There are some restrictions to protect your property if the tenant is making any of these minor repairs but obviously this is why I say make sure your onsites are trained to recognize a notice from a tenant to make repairs so that action can be taken immediately and something can be done within that 14 day window because as long as you make this $400 repair within 14 days, you don’t have to worry about the tenant going out and getting who knows what contractor to make the repairs themselves. So very, very important to pay attention to notices that are coming in from your tenant.

All right, let’s talk about landlord’s access. Like the Chicago ordinance, there is a section in Cook County governing a landlord’s right of access. There are a bunch of reasons under the section that a landlord can enter the property, including to make repairs, to provide services, to show to prospective tenants within 60 days of the end of the lease for inspections everything of that nature. But what you really also need to know is that other than in the case of an emergency, you have to give a two days written notice of your intent to enter either by mail, telephone, or written notice at the unit and other than in emergency situations, you can only go in at reasonable times and reasonable is defined as any time of between 8:00 AM and 8:00 PM or anytime that’s requested by the tenant. So if the tenant says, “I leave for work at 8, can you guys get here at 7?” That’s absolutely fine. You can go in at 7:00 AM, cause you have permission from the tenant. The tenant can also waive that two day notice. So if you need to do some routine maintenance, whatever it might be in the property, clean out the dryer vents, whatever it might be and you say, here we’re giving our two day notice, we’ll be in in two days and the tenant says, Hey, I’m home this afternoon, any chance you could do it now? You are absolutely allowed to do it at that time if you have permission from the tenant to go in.

Now, in emergency circumstances, you can enter without notice, but then you have to give notice within two days afterwards that you went into the property. So the best way to do that if you go in on an emergency, leave a note on the counter, leave a notice right there that you had entered, then you won’t forget to do it within the two days afterwards. If you violate this section and you do not give two days’ notice, and I know a lot of suburban Cook County properties are used to a 24 hour notice, it is now two days and if you violate that the tenant gets a penalty equal to one month’s rent or twice any damages that they might have because of that plus their attorney’s fees and court costs. So you definitely don’t want to violate that. If you’re still giving 24 hour notices for access, make sure you are increasing them to two days. Renewals and termination of tenancy; to terminate a lease now you have to serve a written notice on the tenant that you do not intend to renew the lease and you have to serve that notice at least 60 days before the end of the lease. If you do not give a notice of non-renewal at least 60 days prior to the end of the lease, your tenant can stay in the unit for up to an additional 120 days under the same terms and conditions of their lease.

So if you blow that 60 day mark and do not give a notice of non-renewal, maybe you thought they were going to renew and you were set to go and all of a sudden they say, ah, I don’t know, we might stay or whatever it might be and you blew that 60 days, they get to stay for an extra four months at the same rent. So really, really important that you start issuing notices of non-renewal. Now, on the other hand, if you 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 more than 60 days prior to the lease end date. So yeah, violation penalty is you’ve got that 120 days at the same rent without a rent increase. So let’s talk about pay and stay. This is a big one and it’s a new one. The Cook County incorporated a recent amendment into the Chicago ordinance in that a tenant has a one-time right in the case of an eviction to pay all unpaid rent, filing fees and court costs prior to the entry of an eviction ordering court and if they do that, they get to stay in the property.

So if the tenant makes such a payment, you have to accept it and the eviction case has to be dismissed. Now notice this is in conjunction with the ban on attorney’s fees that we talked about earlier. So the tenant has this right to make payment on rent and the court costs anytime up to the date that the eviction order is going to enter. So, in Chicago, it’s a delay tactic on the tenant’s rights attorneys use all the time to file a jury demand. To make the case go slower, they use it as leverage to get settlements out of landlords because landlords don’t want to wait 12 months for a jury to be heard. If that starts happening in Cook County and tenants are filing jury demands to delay their cases and strong armed landlords into settlements. You have to think about how that affects this pay and stay. You could have a case that has gone on four to six months in preparation for a jury trial and with all the extra court appearances now with mediations and the early resolution program in Cook County, you could be incurring additional attorney’s fees in following the eviction through and at the end of the day walking in for jury trial that morning, everybody has prepared and you have spent thousands of dollars in attorney’s fees cause you think you’re going to jury trial and the tenant brings in a check for 10 grand that covers all their past due rent and the court costs and file fees and we have to dismiss that case immediately and the tenant gets to stay in the property.

So this pay and stay is new and it’s harsh. It kind of makes you think if you have a problem tenant who you want to non-renew, but they also have a small rent balance, you have to really think, do I want to do a five day notice and pursue an eviction for nonpayment with the risk that they pay and stay and then I have to start the non-renewal process or just be ready to send that balance to collections without going after it in court and just do a non-renewal to get them out because the most important thing with at that tenant is to get them out of the property and not risk the pay and stay. So it’s a little bit more to think about if you have a problem tenant that you want out desperately and you don’t want to give them the chance to pay and stay. The last thing I will say, this is a one-time right on behalf of the tenant. It’s very clear in the ordinance they get this opportunity one time. Since the eviction ban has lifted, I already have a tenant who invoked this right at a suburban property about two months ago. We dismissed the case, he immediately fell behind in rent again and we have now filed a new eviction against the same tenant. He does not get that right again. He used his pay and stayed right. He does not get to pay in full and stay in the property a second time.

Security deposit. So this is the most highly litigated area of the Chicago ordinance and I’m sure it’ll be highly contested in Cook County as well. One of the most important things to know is that you 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 and if you take a security deposit that’s greater than one month rent, the tenant has the option to pay the remainder in up to six equal installments at the beginning of the lease term. So if you take that one and a half months rent security deposit, they have to pay you an amount equal to one month’s rent but the remaining half month, they can split into six payments over the first six months of the lease. Providing a proper receipt, so when you take a security deposit, you have to provide the tenant with a written receipt that contains the name of the person who received the deposit, the date on which the deposit was received and a description of the rental unit. If the security deposit was tendered to the landlord’s agent or property manager, the receipt must also identify the landlord. Finally, the tenant has to sign the receipt.

Now, the Cook County ordinance was a little bit more sophisticated technology wise with the times where Chicago did not contemplate different digital and electronic options and the Cook County ordinance actually says in the case of an electronic funds transfer, you can give an electronic receipt and get a tenant digital signature. So once you accept a security deposit and you give the tenant a proper receipt, the deposit has to 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 commingling prohibition is that you can accept payment of the first month’s rent and security deposit in one check or one electronic funds transfer, if within seven days you transfer the amount of the security deposit into a separate account. You also have to include in your lease the name of the financial institution where the security deposit is being held. If you transfer that security deposit during the tenancy to a new bank, you have 14 days after you transfer it to provide the new bank’s information to the tenant.

On sale of your rental property and the security deposits, what happens? So when you sell your rental property, the security deposit has to be transferred from seller to buyer. 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 managing agent’s name, address, phone number, as well as the security deposit information the bank where the security deposit is now being held. So that’s the buyer, the buyer who is becoming the landlord has 14 days from the date of sale to provide this notice. The seller of the rental property who’s the outgoing landlord has 10 days from the date of the sale to provide notice that the security deposits have been transferred to the new landlord and that notice also has to include the name, address, and phone number of the new landlord or managing agent and if the seller doesn’t provide this notice within 10 days after the sale, he actually remains liable for the security deposit and for security deposit violations along with the new landlord. So that’s pretty harsh.

If you’ve got a long term tenant who stays in the unit five years after you sell your property and you forgot to send a notice within 10 days of sale that you transferred the security deposit to the new guy, even if the new guy sent his notice out, and then the new guy doesn’t do his interest right, forgets to disclose when he transfers the money from one bank to another, you could be liable five years down the road for security deposit violations because you forgot to send this notice out after sale. So really, really important. Again, the buyer has 14 days to send the notice, the seller has 10 days to send the notice.

Security deposit interest surprisingly there is no requirement for payment of security deposit interest under the Cook County ordinance. So you will still follow the Illinois security deposit interest act like you always have, which does require you to pay interest at the end of a 12 month rental period. Returning 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, not necessarily from the termination date of the lease, the 30 day clock starts when the tenant vacates the property. So if you’re coming up to the end of the lease, it’s important to kind of keep checking for occupancy to make sure you know the date or the approximate date that the tenant actually moves out so you start counting your security deposit, return clock on the day they vacate versus the end date of the lease cause they might move out a week early, you never know. If there is unpaid rent, wrongfully withheld rent, or damage to the property, you can deduct those amounts from the security deposit as long as you follow this process: 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 actual or estimated cost for the repairs and if you have them, copies of the actual receipts for any work that was done.

Now, if the repairs cannot be done within 30 days, you have to provide the estimated costs in that first 30 days and then you get an additional 30 days to get the work done and provide actual receipts. So in total, you only have 60 days to get the repairs done and provide receipts for any withholdings from the security deposit after the date the tenant vacates. So it’s important you get in there right away and start turning the units, especially in this day and age with supply chain issues and contractors being backlogged, you really want to make sure that you are timely in making the repairs so that you can withhold you need to from the security deposit within that time frame. All right, we’ll talk about remedies quickly. So if a landlord takes a security deposit of more than one and a half months rent, refuses to allow a tenant to make payment over one month’s rent in those six installments or doesn’t comply with requirements for returning the security deposit, then the tenant recovers two times the security deposit plus attorney’s fees. No questions asked, no part of the landlord to say it was inadvertent, it was a mistake, I didn’t realize, I was in violation, that’s called strict liability. The landlord is liable no matter what.

For breaches of the other security deposit provisions, the tenant is actually required to give you a two days’ notice to fix whatever mistake was made and if you don’t fix it, then they get that two times penalty. If I was unable to answer any of your questions, please take note of my phone number or email, and I will get back to you as soon as I can. I’m sorry it ran long. There’s a lot of information in this ordinance that we have to cover. So I appreciate you guys coming and hanging out with me for an hour and learning a little bit about the Cook County RTLO and again if you have any follow up questions, don’t hesitate to reach out. Have a great afternoon, everybody. Thank you so much.

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 the 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 Jesse or anyone 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.

Outro: The music for this show is provided by podcastthemes.com. 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 laws and ethical rules or regulations.

 

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. © 2021 Kovitz Shifrin Nesbit, A Professional Corporation.