As a Property Management Firm and also real estate investors ourselves, we are keeping a close eye on the proposed Cook County RLTO ordinance that would apply to all portions of Cook County. The only exemptions to this new ordinance at this point would be Chicago, Evanston, and Oak Park because they already have a similar ordinance in place. This means if you are a landlord in Barrington, Schaumburg, Berwyn, Tinley Park, Lansing or any of the other 131 municipalities you will be affected.
What are the new changes?
There are a lot of changes Suburban Cook County Landlords and Property Managers would have to adapt to. Many of these charges are far from what we are challenged with now day in and day out. Some of these changes match what we are in compliance with currently under the CRLTO in Chicago, but this new ordinance takes some of these changes a step further in the direction of benefiting the tenant.
Here are just a few examples you will see in both the original and proposed substitute version.
Late Fees - The ordinance would set a specific cap to the amount of late fees a Landlord can charge each month. Both the original and proposed changes set the limits on late fees to $10 per month for the first $1,500 of rent and the 5% additional for rent above that. $2,000 monthly rent would be $35 max late fee you can charge.
Security Deposit - Like most of us do in Chicago, we work around the security deposit laws by accepting Non Refundable Move In Fees, however, this ordinance would not allow the collection of a non refundable fee.
Lease Renewals - Both the original and proposed changes say that no tenant should be required to sign a lease renewal more than 90 days prior to the termination date of the rental agreement.
Security Deposit Interest - Both the original and proposed changes say that all security deposits be held in an interest bearing account within an Illinois financial institution.
Focus On Conditions - In both the original and proposed versions there is a large focus on penalties to owners that do not maintain a certain level of conditions to the property. Landlords need to keep their property safe and address ongoing and capital improvements but this ordinance has it written to be very subjective or in a way that Landlords will find themselves guilty until proven innocent.
Disclosure Of Costs - Landlords would be responsible for disclosing utility costs for the previous 12 months of a rental unit.
Abandonment and Property - If the tenant left personal property that is of little value, the landlord must notify the tenant that the items will be disposed of. After sending the notice the landlord shall store all personal property of the tenant in a place of safekeeping.
These are just a few examples of what we will all have to quickly adapt to and compliance with this will be mandatory. The cost of not following the rules comes with some hefty penalties that are spelled out in both the original and proposed versions of this ordinance.
When will this pass and go into effect?
The likelihood that some version of this ordinance will pass before the end of 2020 is very high. The original proposal suggests all terms becoming effective immediately but the proposed change includes an effective date of June 2021. We anticipate it will be negotiated to go into effect somewhere between January and June of 2021.
There are a lot of questions that companies like us have. How do we handle current residents already within a lease? How do we modify our current lease? What type of grace period will we have to fall into compliance? What landlords are targets for potential class action lawsuits in the upcoming years? There is also rumor that the CRLTO and this new ordinance could combine to just be one county ordinance. At this point we are unsure if that is good or bad from a compliance standpoint. This outpouring of data may cause a certain level of anxiety, however, we are assisting our clients by researching those questions all while attempting to keep everyone’s risk to a minimal level.
Check back often for updates because we are following changes on this daily.
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