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What Are The Security Deposit Changes in RTLO

What Are The Security Deposit Changes in RTLO

In January 2021, the Cook County Commissioners passed the new Residential Tenant Landlord Ordinance, also known as the new RTLO.  The RTLO will go into effect on June 1, 2021 and will bring many changes to owners in the 125 cities in Cook County. The ordinance will exclude Chicago, Oak Park, Evanston, and Mt. Prospect as they already have their own version of a rental ordinance.  

One of the largest changes for Landlords that will go into effect with this new ordinance is the way security deposits will be handled.  The changes included in the new RTLO concerning the collection and disposition of security deposits are now as follows:

How Much Deposit Can Cook County Landlords Collect - A Landlord may not demand or receive a security deposit in an amount in excess of one and one-half months’ rent. A Landlord may not avoid the coverage of this subsection by labeling the fee or charge as anything other than a security deposit.

When is a Security Deposit Due -  A tenant shall pay the Landlord, at the time the tenant moves into the premises or at any other time mutually agreed upon by the parties, the amount of the security required by the Landlord. Any portion in excess of one (1) month’s rent, at the election of the tenant, shall be paid either at the time the tenant pays the initial security deposit, or shall be paid in no more than six (6) equal installments no later than six (6) months after the effective date of the lease. 

Timeline for the Return of Security Deposits in Cook County - Upon termination of the tenancy, property or money held by the Landlord as a security deposit shall be returned to the tenant within 30 days after the tenant has vacated the dwelling. 

What & When May I Deduct From Security Deposit - Any unpaid rent that has not been validly withheld or deducted, pursuant to state or federal law or local Ordinance, and any courts costs (but not attorney’s fees) awarded by a court in a case that has not been subsequently settled.  Any reasonable amount necessary to repair any damage caused to the premises by the tenant, or any person under the tenant’s control or on the premises with the tenant’s consent, reasonable wear and tear excluded. In the case of such damage, the Landlord shall deliver or mail to the last known address of the tenant, within 30 days, an itemized statement of the damages allegedly caused to the premises and the estimated or actual cost for repairing or replacing each item on that statement, attaching copies of the paid receipts for the repair or replacement. If estimated cost is given, the Landlord shall furnish the tenant with copies of paid receipts, or a certification of actual costs of repairs of damage if the work was performed by the Landlord’s employees, within 30 days from the date the statement showing estimated costs were furnished to the tenant. 

Where Do I Need To Hold My Cook County Security Deposit - A Landlord shall hold all security deposits in a federally insured account in a bank, savings and loan association, or other financial institution located in the State of Illinois. A security deposit shall continue to be the property of the tenant making such deposit, shall not be commingled with the assets of the Landlord, and shall not be subject to the claims of a creditor of the Landlord or of the Landlord’s successors in interest, including a foreclosing mortgagee or trustee in bankruptcy.

How Can I Collect Move in Funds Properly In Cook County -  A Landlord may accept the payment of the first month’s rent and security deposit in one check or one electronic funds transfer, and deposit the check or electronic funds transfer into one account if, within seven (7) business days of acceptance of the check or electronic funds transfer, the Landlord transfers the amount of the security deposit into a separate account that complies with this section.

Do I Need To Disclose Where The Security Deposit is Held - A Cook County Landlord shall clearly and conspicuously disclose the name of the financial institution where the Landlord has deposited the security deposit in the written rental agreement signed by the tenant. 

Can I Change Where Deposits Are Held During The Lease Term - Yes, if a Landlord transfers the security deposit from one financial institution to another, the Landlord shall notify the tenant in writing of the name of the new financial institution within 14 days of the transfer or within a reasonable time, given all circumstances.

Do I Need To Provide A Security Deposit Receipt - Any Landlord who receives a security deposit from a tenant shall give a receipt indicating the amount of such security deposit, the name of the person receiving it, and, in the case of the agent, the name of the Landlord for whom such a security deposit is received, the date on which it is received, and a description of the dwelling unit. The receipt shall be signed by the person receiving the security deposit. Failure to comply with this subsection shall entitle the tenant to immediate return of the security deposit. 

How Do I Provide Receipt If My New Tenant Pays Electronically - Upon payment of the security deposit by means of an electronic funds transfer, the Landlord shall give the tenant a receipt that complies with this section, or an electronic receipt that complies with this section, or an electronic receipt that acknowledges the receipt of the security deposit, a description of the dwelling unit, and an electronic or digital signature of the person receiving the deposit. 

What Happens To a Security Deposit If I Sell The Property - If a Landlord, who has received a security deposit, sells, leases or transfers ownership or otherwise transfers control or other direct or indirect disposition of residential real property, the successor Landlord of this property shall be liable to that tenant for any security deposit which has been paid to the transferor.

What Happens If I Fail to Follow The New Security Deposit Laws in Cook County -  If the Landlord fails to comply with the RTLO, the tenant shall be awarded damages in an amount equal to two times the security deposit and reasonable attorney’s fees. 

What Is The Tenants Role with Security Deposit Under RTLO - If the Landlord fails to comply with one or more of the disclosure requirements, the tenant may notify the Landlord of the Landlord’s failure to comply with this section by written notice. Within two (2) business days after the receipt of the tenant’s written notice, the Landlord shall remedy and provide the disclosures as described in those sections. The written notices required by this section may be delivered electronically if the parties have previously communicated electronically. The written notice from the tenant to the Landlord must include that there has been a breach of the rental agreement and that the Landlord must remedy the breach within two (2) business days after the tenant delivered the written notice or face damages. If the Landlord fails to remedy within two (2) business days, the tenant shall be awarded damages in an amount equal to two times the security deposit and reasonable attorney fees. 

  • The security provision of the ordinance is one of the biggest adjustments Cook County Landlords will have to make leading up to June 1, 2021 and while conducting business going forward.  
  • You must seek a Real Estate professional and attorney to be sure you are going to be compliant with the adjustments you will be making to your business.  

Reach out anytime to discuss exceptions or new approaches to stay in compliance. As Chicago’s Responsive Property Manager, we always enjoy talking to Chicago Landlords and want to help them stay compliant within the new legal landscape that seems to be changing annually.  

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