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The Landlord-Tenant Environment in Illinois
Of the 12.6 million residents in Illinois, 11.4% are renting, meaning there are 1.4 million tenants in Illinois. Illinois has a high volume of tenants compared to most states, but not as high as D.C., California, or New York.
We ranked the best landlords in the US based on a survey of our landlords. Illinois landlords ranked #4 for being knowledgeable of their state laws, having a lower percentage of court disputes, and being more likely to change the locks.
The landlord-tenant state laws in Illinois are fairly straightforward, but the laws in Chicago are more complex. The Chicago Residential Landlord Tenant Ordinance (CRLTO) has strict laws, especially for security deposits, which may be why Illinois landlords are the second most likely in the country to charge a move-in fee on top of a security deposit. Overall, Chicago has one of the most strict landlord climates in the country, which is why we say Illinois is a tenant-friendly state.
In this article, we’ll go through Illinois landlord-tenant law. For Chicago landlords, we included specific Chicago laws towards the end of the article. Please be aware that city and local laws can be more specific and in-depth than state laws, and landlords must follow their local laws.
Illinois Landlord-Tenant Regulations
Security Deposit
Which situations allow a landlord to withhold a security deposit in Illinois?
Security deposits are designed to secure rent payments and compensate the landlord for actual property damage or the nonpayment of rent. In Illinois, this allows a landlord to withhold a security deposit for only one of two very specific reasons:
1) If the tenant owes unpaid rent
2) If there is damage caused by the tenant beyond normal wear and tear
It’s more common for landlords to withhold money due to property damage than for unpaid rent or utilities. In fact, 82% of Illinois landlords who collect a security deposit withheld part of the deposit for property damage.
In addition to covering costs at the end of the tenancy, security deposits are also a useful way to measure if a tenant is responsible with their money. Landlords often collect a security deposit to see if tenants have been able to accrue savings to pay the full security amount.
When must a landlord return the deposit by in Illinois?
If a landlord has no reason to withhold the security deposit, as mentioned above, it must be returned within 45 days of the tenant moving out.
If the security deposit is not returned in full, the landlord is required to provide a written itemized list to the tenant stating how the deposit money has been used to cover costs (whether it’s to cover unpaid rent or paying for repairs). This list must be given to the tenants within 30 days of the tenant moving out. The itemized list must include paid receipts stating the cost of repairs.
The landlord is required to fix repairs within 30 days of the tenant moving out because they must provide receipts stating the cost of repairs on the itemized list, which needs to be provided within 30 days.
Tenants can sue if a landlord has violated Illinois security deposit law for damages. The amount of damages can range from the deposit amount to two times the amount of the security deposit. They are also liable for the cost of legal fees.
Despite extensive regulation of security deposits in Illinois, they are still commonly used. 95% of Illinois landlords collect a security deposit. Of the landlords who collect a security deposit, approximately 90% of them set the security deposit equal to the monthly rent price.
We recommend landlords use non-refundable move-in fees instead to avoid the headache of security deposits. Move-in fees are less strictly regulated and they are non-refundable. Tenants tend to prefer move-in fees, as well, because they are typically less than one month’s rent, which is less than most security deposits.
Non-refundable move-in fees serve the same purpose as deposits in terms of screening a tenant for financial responsibility. If a tenant has accrued savings and can afford a nonrefundable fee, they are demonstrating their responsibility. You get the same screening benefit as a security deposit without the added headache and risk that goes along with refunding a security deposit.
Do landlords have to pay interest on security deposits in Illinois?
Interest is required to be paid on security deposits if the deposit is held for six months or longer and if the landlord owns a property with 25 or more units.
The current interest rates determined by Illinois for the current year and previous year are:
The Illinois Department of Financial and Professional Regulation releases the interest rate equal to the largest commercial bank in Illinois annually in January. And the City of Chicago publishes the yearly interest rate on their website.
Security deposits in Illinois must be held in a bank account within the state.
Can security deposits be commingled with other assets?
The security deposit can be commingled with other assets if interest is not owed to the tenant (if the deposit is held for 6+ months or if the landlord owns less than 25 units in a single building or complex), otherwise the deposit must be kept in a separate account from the landlord’s operating account and other personal accounts.
According to our survey, 75% of Illinois landlords that collect security deposits keep the deposit in its own account- separate from all other assets.
Is a deposit receipt required in Illinois?
Security deposit receipts are not required, but we recommend issuing a receipt to record the transaction anyway.
Although Illinois does not specify the following as rules, we recommend landlords follow this procedure to reduce confusion and legal trouble.
- State the location of the security deposit in the rental agreement.
- If the landlord is required to provide the tenant interest on the deposit (he or she owns 25 or more units or has the deposit for 6+ months), then the landlord should specify the interest rate the tenant will earn in the rental agreement.
- If the landlord changes the location of the deposit, the landlord should update the tenant in writing of the new location. A thorough written notice will state the new location for the deposit, why it has been moved, and the date of the transfer.
Rental Agreement
Rental agreements are required for tenancies that are 12 months or longer. Oral agreements are technically “legal and enforceable” if the term is less than one year, but it’s hard to prove what was verbally agreed upon. Without a written rental agreement, it is very difficult to bring issues to court. We recommend having a signed rental agreement, no matter how long the rental term, for added legal security and to make the terms clear.
Get started now by creating an online rental agreement with Rentalutions. Our attorney-approved rental agreement includes all the necessary notices and disclosures based on your property’s address. It’s never been easier to create, modify, and sign a rental agreement. And check out our tips to make your rental lease even better.
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Late Fees and Grace Periods
Illinois limits late fees to $10 for the first $500 of rent and 5% of the amount above that. For example, if the rent price is $1000, you can collect $10 for the first $500 of rent plus 5% of $500 (the remaining amount above $500). So, for $1000 in late rent, the maximum late fee is $35.
Late fees must be written in the rental agreement if they are expected to be legally upheld and followed. If a landlord doesn’t wish to have a late fee, then it does not have to be included in the rental agreement. But we recommend having a late fee in place as it motivates tenants to pay rent on time. Read here for more on how to handle tenants with late rental payments.
In Illinois, a landlord is not required to have a payment grace period. Rent is considered late if it is paid anytime after the expected due date. If a landlord wishes to include a grace period for late rent (typically five days), then they can include the grace period in their rental agreement. By including a grace period, even if very brief, it makes it very clear to tenants the exact day that a late fee will be assessed.
To ensure rent is paid on time every month, landlords should complete a thorough tenant screening process and make paying rent easy with online rent payments.
Collect and Pay Rent Online.
Bringing convenience, security and transparency to online rent collection. It’s never been easier.
- Collect Rent, Deposits & Fees Online
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- Tenants Have Automatic/Recurring Payments
Re-keying
As a safety precaution, landlords are required to change the locks before a new tenant moves in. If keys are lost or stolen, the landlord is also required to change the locks for the safety of the tenants.
The landlord must sign a disclosure to the tenant stating that the locks have been changed. Although Illinois does not specify what should be included in this disclosure, we recommend including a receipt from a locksmith stating the locks have been changed and the date. This protects the landlord from liability in the case of theft.
Despite Illinois law requiring landlords to change the locks, roughly 33% of Illinois landlords do not change the locks. And 23% only change the locks if the tenant asks them to.
If the landlord does not change the locks and theft or damage occur, the landlord may be responsible for any damage the tenant incurs.
The landlord is not required to change the locks under the following circumstances if:
- The lessee has obtained the right to rekey the unit
- The unit lock is pursuant to a written lease agreement
- The unit is in an apartment building with 4 units or less
- Another unit in the building is owner occupied
- The unit is in a county with a population above 3 million
Pet Laws
Illinois does not have any specific pet laws. Landlords are allowed to create their own requirements for pets. They decide if pets are allowed, what size is allowed, etc.
Federal law states that people with certain disabilities have a right to request a waiver for a ‘no pets’ policy if they need a service animal for medical reasons.
Landlords have the right to deny a ‘no pets’ waiver request if allowing the pet causes the landlord financial or administrative burden. But it is very rare for a landlord to deny a service animal.
Landlords are allowed to charge a pet deposit and additional pet rent if they choose.
Rental Licence
What is a rental license?
A rental license is provided by your local government. It grants you permission to rent your property. In order to be licensed, your local township will inspect your property and verify it meets community standards.
Landlord rental licenses are not required by Illinois law but are usually required locally. Check your local jurisdiction for rental license laws and be aware that they typically need to be renewed yearly by paying a fee.
What is the process for getting a rental license?
You apply for a license through your township’s website, your township schedules an inspection, and then assuming you meet all of their codes, you receive a signed and dated license.
Notice of Entry
Illinois requires that landlords provide at least 24 hours notice before entering a unit. Reasonable times are defined as Monday-Friday between 8am and 6pm. The reason for entry can be a repair or to show the property to prospective tenants, future owners, etc.
As you can see below, approximately 76% of Illinois landlords follow the law exactly and provide 24 hours notice. And 24% go above and beyond the law and provide 48 hours notice.
In the case of an emergency, the notice of entry law is waived. Emergencies are situations where people or the property are threatened. For example, a gas leak or water leak constitutes an emergency.
The landlord does not have to provide any proof of the emergency at the time, but if the tenant should believe that the landlord entered unlawfully, the landlord will need proof of the emergency. Proof could be a gas report or notice from the utility company that justifies the landlord believing there is an emergency.
Required Illinois Rental Agreement Notices
Tenant Utility Payment: According to the Tenant Utility Payment Disclosure Act (765 IlCS 740), a landlord must include in the rental agreement whether a tenant is responsible for utilities, specifically for the cost of gas or electric heat for that unit or building.
Notice of Foreclosure: Prospective tenants are required to know if the property is currently in a foreclosure.
Identification Of Owner: The rental agreement must disclose the identify of the property owner.
Conditions Affecting Habitability: Landlords are required to disclose any violations affecting habitability from the past 12 months. This includes the residence and common areas, such as entryways, recreational areas, courtyards, basements, and rooftops.
Radon Hazard Disclosure: Landlords must disclose the known presence of radon in the building. If the building has high levels of radon, then the owner must present a radon report to the tenants.
Mold Disclosure: If there is known mold in the property, the landlord must disclose this information to the tenant.
Asbestos Disclosure: If there is known asbestos in the property, the landlord must inform the tenant.
Lead Paint Disclosure: Landlords must disclose known presences of lead paint in the unit or common areas. The rental agreement must have a federally-approved attachment on lead poisoning prevention.
Oft-Cited Illinois Landlord and Tenant Laws
Landlord and Tenant Act 765 ILCS 705
- If a tenant commits an offense on the property’s premises, the lease can be voided by the landlord.
- If a landlord voids a rental agreement under the provisions of this law and the tenant does not move out within five days, then the landlord can seek legal relief.
- The landlord must re-key the unit after a tenant moves out and before a new tenant moves in. If a theft occurs and the landlord had not changed the locks, the landlord is liable for any damage incurred.
- If a tenant is called to military service during his or her tenancy, the tenant must provide the landlord a written order as proof. The landlord must comply with a lease termination within 30 days of the written military order being provided. It is a civil rights violation under the Illinois Human Rights Act to deny a service member a lease termination in the case that they are called to duty.
Security Deposit Return Act 765 ILCS 710
- A landlord who has received a security deposit from a tenant (to secure rent or compensate for damage) is not allowed to withhold any amount of the deposit unless he or she has provided an itemized list stating the reason for the deduction. The list must include attached receipts to verify the cost of repairs.
- If the landlord repairs the issue on their own, they are allowed to deduct a reasonable cost from the security deposit for their time and labor.
- The landlord has 30 days from the tenant moving out to provide this itemized list and receipts.
- If no list is provided to the tenant within the 30 day limit, the security deposit must be returned to the tenant in full within 45 days of the tenant moving out.
- If the landlord has refused to provide the list and still deducted from the security deposit, or didn’t return it at all, then the landlord is liable for the amount of the 2x the security deposit plus court fees, including attorney expenses.
- If the rental property owner changes, then the person who was transferred the rental agreement is now liable for the security deposit and returning it.
Security Deposit Interest Act 765 ILCS 715
- Interest is owed to the tenant if the security deposit is held for 6+ months of if the landlord owns 25 or more units in one complex or building.
- The interest rate must be equal to the interest paid by the largest commercial bank in Illinois.
- The deposit must be held in a bank in Illinois.
- At the end of each 12-month rental period, the landlord must return any interest earned on the deposit that has accrued to five or more dollars. Interest can be given to the tenant via cash or can be applied as a credit on rent.
Retaliatory Eviction Act 765 ILCS 720
- If a tenant files a government complaint in regard to building or health codes, a landlord cannot terminate the lease or refuse a lease renewal due to the complaint.
- Any rental agreement clauses that attempt to dismiss this law are considered void.
Property Taxes of Alien Landlords Act 765 ILCS 725
- This law pertains to landlords who are not legal U.S. citizens, otherwise known as alien landlords.
- Alien landlords who own properties for the purpose of farming or raising crops are not allowed to have a provision in a rental agreement that requires tenants or any other person to pay taxes for the property. If the rental agreement attempts to do this, it is deemed void.
- If an alien landlord receives money from a tenant for property taxes, the money will be recovered to the tenant.
Rent Concession Act 765 ILCS 730
- The purpose of this law is to avoid the malpractice of landlords stating an inaccurate rent price on rental agreements.
- What is considered rent concession:
- A credit or rebate for rent
- The right to stay in the property for a time period other than the lease duration dates at a rate other than the fixed rent price
- Giving the tenant any valuable or privilege
- What is not considered rent concession:
- If the landlord repairs or decorates the premises
- A waiver of terms and conditions for terms that do not relate to rent payment
- If a rent concession is made after the rental agreement is entered into (meaning both parties have signed), then the landlord must add the words “Concession Granted” on the lease. The text must be at least half of an inch tall.
- There must also be a note on the margin or top of the agreement that states the nature of the rent concession.
Rental Property Utility Service Act 765 ILCS 735
- The landlord is required to pay for utilities to ensure that the tenant has access to gas, heat, and water unless it’s stated in the rental agreement that the tenant is responsible for utilities.
- If the landlord fails to provide these services to their tenant, the tenant is allowed to terminate the rental agreement.
- Utility companies are not allowed to shut off services in the case of nonpayment until they have provided all tenants (in buildings with 3 or more units) a notice warning them of loss of service.
- In the case that the landlord hasn’t paid for utilities, the tenant is allowed to put the service under his or her name and pay for the services. Any payments the tenant makes to the utility company can be deducted from his or her rent.
- Tenants do not have to pay for utilities for common areas.
- If the tenant is paying for utilities on his or her own (as specified in the rental agreement), then the landlord must provide the correct meter and unit information.
- Landlords are required to provide tenants the utility bills from the previous 12 months with the rental agreement to serve as an estimate of heating costs.
- A tenant is entitled to receive money from the landlord for utility bills if the landlord has violated this law.
- Landlords are not allowed to tamper with, interrupt, or stop services for utilities.
- Landlords are not allowed to increase rent to cover the cost of utilities if utilities are meant to be paid by the landlord.
Tenant Utility Payment Disclosure Act 765 ILCS 740
- In the case that a rental agreement states the tenant will pay for utilities, the landlords cannot charge tenants an amount that exceeds the service payment.
- A common interest community association or condominium association decides how utilities are allocated to tenants in different units based on unit size or usage.
Residential Tenant’s’ Right to Repair Act 765 ILCS 745
- The tenant may notify the landlord of necessary repairs stating that the landlord is expected to fix it.
- If the landlord fails to make the repair within 14 days of this notice, then the tenant may have the work completed at the landlord’s expense.
- If the landlord fails to fix the repair promptly in the case of an emergency, the tenant may fix the problem at the landlord’s expense.
- In the case that the tenant has the work done himself or herself, the tenant needs to provide the landlord a receipt for the service.The tenant can deduct the amount of the service from rent that month.
- Landlords are not required to pay for repairs if the damage is caused by the tenant (or anyone on the property with the tenant’s consent).
Mobile Home Landlord And Tenant Right Act 765 ILCS 750
- Mobile homes cannot be rented unless they meet the health, sanitation, and housing code.
- The landlord cannot bring legal action against the tenant for breach of contract or to recover rent:
- If a tenant needs to vacate the rental property due to immediate threat, domestic violence, or sexual violence
- If a tenant provided notice within 3 days of vacating the property
- Tenant can request the locks be changed if he or she reasonably believes they are in imminent danger of domestic or sexual violence.
- The notice requesting a change of locks should be accompanied by one of the following types of evidence of violence:
- Medical or police reports
- A statement from a crisis organization employee or victim services employee
If the person endangering the tenant is another tenant on the lease, then the notice to change the locks must also be accompanied by an Order of Protection. - With proper notice, the landlord has 48 hours to change the locks.
- Landlords cannot disclose this information to other landlords if the tenant exercised his or her rights within this act.
Landlord-Tenant Disputes
Of our landlords surveyed in Illinois, 76% of them have never evicted a tenant.
19% of Illinois landlords have been to court with a tenant. Common reasons for going to court in Illinois are unpaid rent, refusal to pay rent, or late rent.
As you can see above, the majority of Illinois landlords win in court.
Rules and Regulations in Chicago
By following state law, landlords are not necessarily in compliance with city laws, particularly in Chicago. Chicago landlords must follow federal and state laws mentioned above, but also city laws. The Chicago Residential Landlord and Tenant Ordinance (CRLTO) has more strict laws, especially for security deposits.
You can find more about laws in Chicago in the City of Chicago Residential Landlord and Tenant Ordinance, but here is an overview of the important distinctions for Chicago:
Chicago Security Deposit Rules
- Landlords must give tenants a receipt for security deposits. This can be an electronic receipt if the security deposit is paid online.
- The receipt must include the owner’s name, date, and a description of the unit’s condition. The receipt must have the tenant’s signature to verify they received it. Landlords should keep a copy of the signed receipt.
- Security deposits (and interest earned) must be held in a “federally insured interest-bearing account” in Illinois, meaning the deposit cannot be commingled with the landlord’s other assets.
- The name and address of the bank where the security deposit is located needs to be written in the rental agreement and signed by the tenant.
- If there is no rental agreement, the landlord needs to provide a receipt of the security deposit within 14 days of its payment stating the location of the deposit (name and address of the bank where it’s deposited).
- If during the tenancy the security deposit is relocated to a different bank, the landlord needs to notify the tenant within 14 days of the transfer and state the name and address of the new bank.
- The required interest rate is set yearly by Chicago’s City Comptroller. The current rate for 2016 is .01% and can be found online at the City of Chicago.org.
Notice of Entry in Chicago
Chicago requires at least 48 hours for notice of entry. And reasonable times to visit are between 8am and 8pm. In the case of emergency, the notice of entry rule and reasonable hours are dismissable.
Rental Agreement Notices Specific to Chicago
In addition to the required Illinois notices, Chicago landlords are required to have the following:
Summary of Chicago Ordinance: The summary of the CRLTO must be attached to the lease. You can find the Chicago Ordinance Summary here.
Bed Bug History: Landlords must inform tenants if there is a history of bed bug infestation in their unit. Bed bug problems are required to be fixed by the landlord. The landlord only needs to report bed bug infestations for the unit the tenant is renting. A bed bug pamphlet must be attached to the rental agreement.
Security Deposit Summary: A summary of the interest rate and where the security deposit is held is required in Chicago.
Heating Cost Disclosure: Landlord must provide the cost of heating for the year, based on the previous years heating bills.
Chicago Recycling Ordinance: Chicago property owners of multi-unit residential are required to provide source-separated, single-stream recycling. You’re required to do the following:
- Provide a separate blue recycling bin where all recyclable materials can be deposited
- Post a sign in a common area that informs tenants of the following things:
- What materials are required to be recycled
- What materials are not allowed in the recycling bin
- How to prepare materials for the recycling bin
- The location of the recycling bin
- The name of the private hauler that services your property and the collection schedule
- The name and telephone number of the person at the company who is authorized to answer tenants’ questions about recycling
- Attach education information (as described above) to your lease
To make this easier for you, we created a Recycling Education Pamphlet that you can edit and provide to your tenants.
Resources For Landlords and Tenants in Illinois
- Illinois Attorney General Summary of Landlord and Tenant Rights and Laws
- Illinois Tenants Union
- Illinois Tenant’s Rights Pamphlets
- Illinois Small Claims Court
- CRLTO Full Document
- CRLTO Summary
Disclosure Attachments
To make sure you’re following the correct laws and have access to all necessary disclosures, sign up today.
This guide does not constitute legal advice.
Originally published at Rentalutions.
