Security deposits can often be a source of tension between tenants and landlords, but they don’t have to be. Illinois security deposit laws are designed to make the process fair and transparent. This guide covers the key rules, from allowable deductions to timelines for returns, so you can navigate the rental process confidently.
What is a Security Deposit?
A security deposit is a sum of money paid by a tenant to a landlord at the beginning of a lease term. It serves as financial protection for landlords in case the tenant causes damage to the property, fails to pay rent, or breaches other terms of the lease agreement.
Security deposits in Illinois are heavily regulated. While the deposit remains the tenant's property, landlords hold it temporarily and must return it, minus any legitimate deductions, at the end of the lease.
But, can landlord sue for damages beyond security deposit?
Yes, landlords in Illinois can sue tenants for damages that exceed the security deposit amount. If the repair costs or unpaid rent surpass the deposit held, landlords may file a claim in small claims court, where the limit for such disputes is typically $10,000.
Limits on Security Deposits in Illinois
Illinois does not impose a statewide cap on the amount a landlord can charge as a security deposit. However, local jurisdictions may have their own rules. For instance:
- Chicago: Chicago security deposit is capped at 1.5 times the monthly rent under the Residential Landlord Tenant Ordinance (RLTO).
- Other Areas: There are no specific limits unless governed by local ordinances.
Interest on Security Deposits
If the premises is in a building of at least 25 units, the landlord must pay interest to the tenant on any deposit held by the landlord for more than 6 months.
This regulation is outlined under 765 ILCS 715 and ensures that tenants are compensated for the use of their funds. The interest rate is tied to the minimum deposit passbook savings accounts offered by Illinois’ largest commercial bank as of December 31 of the preceding calendar year. This rate applies to the rental agreement for the following year.
Landlords must pay the accrued interest within 30 days after the end of each 12-month rental period, either in cash or as a credit toward the tenant’s rent. However, this obligation is waived if the tenant is in default of the lease agreement. Landlords who fail to comply with this law may face serious consequences.
Deductions from Security Deposits
Permissible deductions
Common permissible deductions include unpaid rent, damages exceeding normal wear and tear, unpaid utility bills, and costs resulting from violations of the lease agreement. To justify these deductions, landlords must provide tenants with an itemized statement detailing the costs within 30 days of the lease's end. This statement should include receipts or invoices for repairs, ensuring transparency and accountability.
Prohibiting deductions
However, the law also protects tenants by prohibiting deductions for normal wear and tear, such as minor scuff marks on walls or aging carpets, which are considered routine maintenance. Landlords are also barred from charging for damages already covered by previous tenant payments or for unjustified expenses not outlined in the lease agreement.
Deadlines and Rules for Illinois Security Deposit Return
The rules for Illinois security deposit return vary slightly depending on whether the property is covered by the state laws or local ordinances, such as Chicago’s Residential Landlord and Tenant Ordinance (RLTO).
So, how long does landlord have to return deposit?
Under Illinois state law, landlords must return the tenant’s security deposit within 45 days after the tenant vacates the premises if no deductions are being made. If deductions are necessary due to damages or unpaid rent, landlords must:
- Provide an itemized statement of damages within 30 days of the tenant vacating the unit.
- Include receipts or invoices for repairs or replacements.
- Return the remaining balance of the deposit and any applicable interest along with the itemized statement.
Tenants are required to provide a forwarding address to facilitate this process.
Meanwhile, In Chicago, the RLTO imposes even stricter rules to protect tenants:
- Landlords must return the security deposit, along with any required interest, within 45 days of the tenant vacating, if there are no deductions.
- Provide an itemized list of damages and estimated or actual costs within 30 days of move-out.
- Include receipts for all repairs or replacements exceeding $100.
- Return the remaining deposit and interest within 14 days after delivering the itemized statement.
Penalties for Non-Compliance
Penalties for non-compliance with the proper procedure for returning a security deposit are steep. Per 765 ILCS 710, upon a finding by a circuit court that the landlord has refused to supply the itemized statement, or has supplied such statement in bad faith, and has failed or refused to return the amount of the security deposit due within the time limits provided, the landlord will be liable for an amount equal to twice the amount of the security deposit due, together with court costs and reasonable attorney’s fees.
2024 Updates to Illinois Security Deposit Laws
While the core requirements under 765 ILCS 710 and 765 ILCS 715 remain unchanged, the updates address key procedural details:
- Interest Rate Calculations: Landlords must refer to the interest rate published by the largest commercial bank in Illinois as of December 31 of the preceding year, ensuring uniformity and eliminating ambiguities in calculations.
- Penalties for Non-Compliance: Courts can now impose fines equal to double the deposit amount, along with court costs and attorney fees, for willful violations.
- Chicago Ordinance Enforcement: In Chicago, enforcement mechanisms under the Residential Landlord and Tenant Ordinance (RLTO) have been strengthened. Landlords who delay or omit required actions, such as providing receipts or returning deposits, may face expedited legal proceedings and higher fines.
Bottom Line
At the end of the day, knowing Illinois security deposit law is key to avoiding disputes and ensuring fairness for everyone involved. The more you know about your rights and responsibilities, the easier it will be to navigate rental agreements with confidence.
