01.29.15

Reforming Traditional Policies: The Elimination of Tenant Security Deposits

The rental industry standard since the dawn of time has been to require a security deposit, usually equivalent to one month’s rent. This practice was put into place to protect the owner’s financial interest in case of damage, or if the tenant becomes delinquent on rent. For the first time ever in 2014, the new lease introduced by Chicago National Association of Realtors, advised Chicago landlord to stop requiring security deposits.

That’s because in Chicago we have one of the toughest landlord/tenant ordinances that most landlords would agree, overprotects tenants and is punitive to landlords. When collecting security deposits, a landlord is required to open an interest bearing segregated federally insured bank account for that security deposit, and it is to be returned to the tenant within 45 days of lease expiration, with an itemized list of all cost deductions due to repairs -normal wear and tear does not apply- with receipts.

Many say there is far higher a risk of liability when collecting security deposits, than the risk of destruction to the property and therefore the industry trend is moving toward collecting non-refundable move-in fees instead. Here is more interesting reading on the topic:

Chicago Tribune

http://articles.chicagotribune.com/2014-01-24/classified/ct-mre-0126-podmolik-homefront-20140124_1_security-deposits-chicago-landlords-tenant-ordinance

Curbed Chicago

http://chicago.curbed.com/archives/2012/03/29/more-on-renting-deposits-fees.php

Legal overview: http://www.illinois-attorney.com/practice-areas/evictions-and-landlord-tenant-law/chicago-and-illinois-security-deposit-return-and-recovery/

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