2016 Security Deposit Interest Rate Remains Unchanged
The City of Chicago announced the new security deposit interest rates for 2016. The rate remains unchanged from 2015.
Under Chicago law, the rate of interest to be paid on security deposits for rental agreements entered into or renewed during the calendar year 2016 is .01%. In other words, a landlord holding a $1,000 security deposit under a lease made or renewed in 2016 will owe a tenant 10 cents in interest.
Although this amount may seem insignificant, a landlord who neglects to pay interest on a security deposit could be on the hook for damages equal to two times the deposit plus interest, attorney fees, and court costs. To avoid this liability, many property managers have opted for non-refundable move-in fees as an alternative to security deposits. You can read more about collecting move-in fees here.
Security deposit funds must be placed into a federally-insured, interest-bearing, segregated account at a financial institution located in the State of Illinois, and the funds may not be commingled with other landlord assets. However, security deposits received from multiple tenants may be deposited into a single account. Unless the landlord is withholding amounts for damages, the landlord is required to return the security deposit, plus accrued interest, within 45 days after the tenant vacates the apartment. For more information regarding the Chicago law on security deposits, check out Domu’s Guide to Security Deposits.
The Chicago Residential Landlord Tenant Ordiance requires that landlords attach a copy of the security deposit summary to the rental agreement. The form can be found here.