Chicago Landlords, Don’t Forget To Make Your Eight Disclosures!
If you’re a Chicago landlord, you’re in a highly-regulated industry. A wide array of federal, state, and local laws govern landlord-tenant relationships, and these laws mandate at least eight different disclosures, depending on the age, condition, and location of the dwelling unit. The penalties for omitting these disclosures range from rescission of the lease to the imposition of costly penalties and the indignity of paying the tenant's attorneys' fees. To help the Chicago landlord community comply with these disclosure obligations, we have summarized the eight disclosures that may be applicable to any Chicago lease.
To keep things brief, we’ve dispensed with an analysis of the specific penalties associated with each failure to disclose. If you make the disclosure, you won't have to worry about penalties. Also, in some instances we’ve taken the liberty of referring to the Chicago Residential Landlord and Tenant Ordinance as the “landlord-tenant ordinance” or, simply, the “ordinance.” As explained below, the ordinance contains exemptions, the most common being dwelling units in owner-occupied buildings of six units or less, so landlords should consult the ordinance (in Chapter 5-12 of the Chicago Municipal Code) to determine whether they are required to comply. If not, some of the disclosures described below need not be made.
The Chicago Residential Landlord and Tenant Ordinance requires landlords to disclose (i) the existence of any building code violations in the past 12 months, (ii) the pendency of any “enforcement litigation” or “compliance board proceeding,” and (iii) any notice of intent by either the City of Chicago or any utility provider to terminate the water, gas, electrical, or other services, provided (in each case) that they relate to the dwelling unit being rented or the common areas of the building. In other words, if you’re in trouble with either the regulators or the utility companies, you probably need to make a disclosure. The disclosure must be made before the lease is signed, although, in the case of a threatened termination of utility service, it must also be made promptly upon notice, even if the tenancy is already underway. The specific information to be delivered, in the event disclosure is required, is provided in Chapter 5-12-100 of the Chicago Municipal Code.
Identification Of Owner And Agents
The landlord-tenant ordinance requires a disclosure, before the lease commences, of the name, address, and telephone number of the property owner or person authorized to manage the premises, as well as the person authorized to act on behalf of the owner for the purpose of service of process and the receipt of notices and demands. The ostensible purpose of this law is to prevent a landlord from signing a lease with a corporate or trade name and failing to supply any contact information, which would leave the tenant out in the cold if and when the roof collapses or the furnace explodes. Landlords have a continuing obligation to update their contact information (or the contact information for their agents), and this applies to successor landlords too. In other words, always make sure your tenants have something in writing that allows them to find you (or even to serve you with a lawsuit if that’s what tickles their fancy). As noted above, this particular disclosure does not apply with respect to dwellings in owner-occupied buildings of six units or less, among other types of residences exempted from the landlord-tenant ordinance.
Summary Of The Chicago Residential Landlord And Tenant Ordinance
Before the commencement of any written or oral lease, or upon any lease renewal, landlords with dwelling units governed by the landlord-tenant ordinance are required to provide their tenants with a summary of the ordinance. Fortunately, they need not prepare their own summary. The Commissioner of the Department of Housing and Economic Development prepares such a summary, and a copy is available here. In the wake of Chicago’s notorious 2003 balcony collapse, the following language must also be included in the summary of the ordinance that’s delivered to renters: “The porch or deck of this building should be designed for a live load of up to 100 pounds per square foot and is safe only for its intended use. Protect your safety. Do not overload the porch or deck. If you have questions about porch or deck safety, call the City of Chicago non-emergency number, 3-1-1.”
Security Deposit Interest Rate Summary
Before the commencement of any written or oral lease, or upon any lease renewal, landlords with dwelling units governed by the ordinance are also required to provide a summary of the respective rights, obligations, and remedies of landlords and tenants with respect to security deposits, including the interest rate to be paid on security deposits (as announced at the beginning of each year by the City Comptroller), as well as the interest rate in effect during the preceding two years. (The city makes a form available, and a copy can always be found here.) In recent years, landlords have gradually moved away from security deposits and have begun assessing non-refundable move-in fees as a means of avoiding the punitive effects of the ordinance. Just to be safe, we at domu recommend that the security deposit interest summary be delivered to tenants even in cases where no security deposit is taken. The piece of paper costs two cents and the peace of mind is priceless.
Security Deposit Information
Landlords who take security deposits (and whose dwelling units are governed by the ordinance) must also provide tenants with a security deposit receipt indicating the amount of the security deposit, the name of the person receiving it (or the identity of the landlord for whom it is received), the date on which it is received, and a description of the dwelling unit. The receipt must be signed by the person receiving the security deposit. In addition, the landlord must disclose in the lease the name of the financial institution where the security deposit is being kept. (Some landlords make this disclosure on the security deposit receipt, reference that receipt in the lease, then require the tenant to initial the reference, signifying delivery of the receipt.) If, during the lease period, a security deposit is transferred from one financial institution to another, the landlord is required, within 14 days of the transfer, to notify the tenant in writing of the name and address of the new financial institution. There are special rules that apply to security deposits accepted by electronic funds transfer, and these rules can be found, along with the remainder of the landlord-tenant ordinance, in Chapter 5-12 of the Chicago Municipal Code. A sample security deposit receipt can be found here.
Heating Cost Disclosure
The City of Chicago requires that a heating cost disclosure be made in connection with any dwelling unit “individually metered” for heat and for which the tenant is required to pay the utility cost. The administrative regulations promulgated in connection with this law clarify that “individually metered” includes central heating in multifamily apartments where the landlord pays a single utility bill and requires the tenants to pay an allocated portion computed in accordance with either sub-metering or a formula that approximates monthly usage. The purpose of the heating disclosure ordinance (which can be found in Chapter 16-5 of the Chicago Municipal Code) is to ensure that all tenants are provided with the projected average monthly cost of heating based on energy consumption during the most recent annual period of continuous occupancy by one or more prior occupants, standard utility costs, and “normal” weather.
The disclosure must be provided to the tenant prior to the consummation of any oral or written lease and prior to any exchange of money, and the landlord is required to obtain a signed receipt from the tenant verifying that the information was delivered. A new heating cost disclosure need not be made in connection with lease renewals. The city makes a preprinted form available for landlords to send directly to the utility provider, and a copy is available here. Theoretically, the public utility completes the disclosure and mails it back to the landlord, who then tenders it to the prospective tenant, although the process can often consume several weeks, and many landlords simply make the disclosure on their own homemade form based on their own records. (In addition, many landlords just call the utility company to obtain the information.)
Lead-Based Paint Disclosure And Pamphlet
Any dwelling unit built before 1978 potentially contains lead-based paint, which poses health risks to adults and children alike. Federal law therefore requires landlords to make certain disclosures to tenants when renting out dwelling units of pre-1978 vintage. To satisfy the law, the landlord must provide the tenant with a pamphlet approved by the U.S. Environmental Protection Agency (such as “protecting your family from lead in your home”) and disclose the location and condition of any known lead-based paint hazards. If the landlord possesses any reports about the existence of lead-based paint on the property, including the common areas, that information must be disclosed as well. Any and all disclosures must be attached to the lease, and a sample disclosure form is available here.
Radon Hazard Disclosure
Radon is a colorless, odorless, naturally-occurring radioactive gas that seeps out from the crust of the earth, often in dangerous quantities. It’s a “Class A” carcinogen and the second leading cause of lung cancer in America. When your roommate unexpectedly takes up smoking, it’s a clearly-identifiable health risk, but when radon is seeping through the cracks in your basement foundation, you have no idea that you’re smoking several packs of cigarettes a day. Illinois is not one of the riskier terrains, although the federal and state governments encourage residents, and particularly landlords, to conduct radon testing.
The Illinois Radon Disclosure Act, 420 ILCS 46/1, requires any landlord renting out a unit on the first or second story above ground level (but not on the third story or higher) to disclose to prospective tenants the existence of a radon hazard, but only if a radon test has indicated the presence of a radon hazard. This does not require lessors to conduct radon testing. The disclosure requirement is triggered only if a prior tenant provides the landlord, in writing, with the results of a test indicating the presence of a radon hazard or if the landlord conducts its own test and determines that a radon hazard exists. Even if a radon hazard exists, however, landlords are not required to provide any type of informative pamphlet to renters. Instead, mere disclosure of the radon hazard suffices. We recommend that this disclosure be delivered in written form and that a receipt be obtained from the tenant.