Does the RTLO apply to you?
Cook County Real Estate investors/landlords that own real estate outside of the Chicago city limits in the collar suburbs, are in for a new reality.
- If you are currently a Landlord in Barrington, Schaumburg, Berwyn, Tinley Park, or Country Club Hills, you now have to approach being a Landlord a little bit differently.
- If you are looking to invest, or turn your primary residence into a rental in suburban Cook County, you now have another level of due diligence to complete prior to pulling the trigger.
On January 28, 2021 the Cook County Board of commissioners passed the new Residential Tenant Landlord Ordinance(RTLO) that will forever change being a Landlord in Cook County. Over my career as both a Property Manager and investor, I watched others around me avoid investing inside of Chicago to avoid the Chicago Residential Landlord Tenant Ordinance(CRLTO). The ordinance bore an extra layer of risk when it came to dealing with tenants. The new RTLO for suburban Cook County is similar to the Chicago CRTLO that was passed in the 80’s.
The RTLO being passed was not a surprise to Landlords around Chicago because many housing providers have been putting up a strong opposition since November of 2020. The RTLO was introduced over the summer of 2020 by the County Commissioners, but it wasn't until October when people started to take notice of the extreme rules that came with the first version of the proposed ordinance. Between October and January (last month), organizations like Chicagoland Apartment Association (CAA), Neighborhood Building Owners Alliance(NBOA), Illinois Association of Realtors (IAR), Straight Up Chicago Investor Podcast(SUCI), and hundreds of Chicago Landlords fought back creating content and messages to the Cook County commissioners on how bad this can be for tenants and the flow of investment money into Cook County.
Although the ordinance was not stopped, the groups above that combined forces and voices made a huge impact on what the final details of the passed ordinance look like. You can read the full ordinance here, but these are some of the major changes that will cause Landlords to adjust the way they do business when this goes into effect June 1, 2021. There is one provision of the RTLO that is in effect as of January 28, 2021 and that is the anti-lockout provision.
Late Fees - Landlords can no longer create their own late fee structure. Late fees cannot be in excess of $10.00 per month for the first $1,000.00 in monthly rent plus 5% percent per month for any amount in excess of $1,000.00. For example the most you can charge for a $1,700.00 late fee is $45.00.
Incentives For Paying Early - Some Chicago landlords provide discounts for payments in advance of the due date. Now that incentive for early pay cannot exceed the same amount that can be charged for a late fee as noted above.
Disclosure Of Utility Costs - The tenant now has the right to disclosure of utility costs which will now become an added step in the leasing process for Landlords. Disclosure of the previous 12 months will be required. The ordinance notes “if known” so this can become an item of interpretation that landlords will have to error on the side of caution.
Heat Provision - The RTLO has adopted Chicago’s minimum temperature inside a dwelling from September 15 to June 1 of each year. Landlords shall maintain the temperature inside a dwelling unit to be at least 68 degrees from 8:30 am to 10:30 pm and at least 66 degrees from 10:30 pm to 8:30 am.
Landlord Entry - If the landlord makes an unlawful entry or a lawful entry in an unreasonable manner, makes repeated demands for entry otherwise lawful, but which have the effect of harassing the tenant, the tenant may obtain injunctive relief to prevent the recurrence of the conduct, or terminate the rental agreement. In each case, the tenant may recover an amount equal to not more than two (2) months’ rent or twice the damages sustained by them, whichever is greater, and reasonable attorney’s fees.
Eviction One Time Tenant Right To Pay - If you are so unlucky to have to evict your tenant and it makes it to court, the tenant does have a one time option to pay in full. This will not allow you to proceed with the eviction and this excludes attorney fees you may have incurred in the process. This can happen anytime during the order of possession up until the day the sheriff shows up if it makes it that far.
Landlord Entry - Entry between 8:00 am and 8:00 pm only unless it is an emergency, and 2 day written notice of entry for each time you need entry. If the landlord makes an unlawful entry, or entry in an unreasonable manner, or repeated unreasonable demands for entry, which have the effect of harassing the tenant, the tenant may obtain injunctive relief to prevent the recurrence of the conduct or terminate the rental agreement. In each case, the tenant may recover an amount equal to one (1) month’s rent or twice the damages sustained, whichever is greater, and reasonable attorney fees.
Tenants Personal Property Upon Abandonment - There are now rules regarding tenants leaving their personal items behind, and the determination if it is left behind or if it is still technically the tenants personal property. This will affect Landlords when they show up and the tenant has already vacated and left items behind. Since no clear notice was given, it gets grey here on what you have to do with the items left behind.
Non Renewal of Lease - The Landlord shall notify the tenant in writing at least 60 days prior to the stated termination date of the rental agreement of the Landlord’s intent to terminate a month-to-month tenancy or not renew an existing rental agreement. If the landlord fails to give required written notice, the tenant may remain in the dwelling unit for up to 120 days after the date on which such required written notice is given to the tenant, regardless of the date specified in the existing rental agreement. During such occupancy, the terms and conditions of the tenancy shall be the same as the terms and conditions during the last month of tenancy.
Lease Renewals - No tenant shall be required to renew a rental agreement more than 60 days prior to the termination date of the rental agreement. If a Landlord violates this, the tenant can recover one (1) months rent or actual damages whichever is greater.
Bed Bugs - It is written that the issue falls solely on the Landlord and in multi unit properties there are many disclosure steps the Landlord must take to notify and update other tenants of the building.
Security Deposit Collection - 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. 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.
Security Deposit Funds Held - 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. 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.
Summary Of Ordinance - A requirement of all leases being signed after June 1, 2021 will be to include an approved summary that is going to be approved by the county prior to the start date.
The above bullet points are what we deem to be the most crucial changes to Cook County Landlords. The ordinance is 29 pages long, so be sure to read through the full document or consult with an advisor that can assist you in reducing or avoiding the added risk this brings to all Landlords.
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 each year.
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