February 12, 2016

Possible Reprieve for Chicago Landlords?

In the City of Chicago, the Chicago Residential Landlord Tenant Ordinance (“CRLTO”) applies to most landlord-tenant relationships. Enacted in 1986, the CRLTO’s main purpose is to protect tenants and establish tenant rights. While its purpose may be noble, some of the law’s provisions have had harsh and possibly unintended consequences. Alderman Brendan Reilly from the 42nd Ward, in conjunction with the Chicago Association of Realtors, has proposed an amendment to the CRLTO that would permit judicial discretion in determining penalties in cases involving CRLTO violations.

There are many ways for landlords to violate the CRLTO, but the mishandling of security deposits is a common and costly mistake. Under the CRLTO, a landlord must keep the tenant’s security deposit in a separate, interest-bearing account at a bank located in Illinois. The City of Chicago sets the interest rate to be paid on security deposits annually. Funds may not be deposited into a landlord’s personal bank account or co-mingled with a landlord’s own assets. Landlords must provide tenants a security deposit receipt that includes the name and address of the banking institution, the date the funds were received, and other required information. Although interest payments typically amount to pocket change, the penalty for not properly handling all aspects of the security deposit is sizeable: two times the security deposit plus interest, plus the tenant’s attorneys fees.

Judges often feel their hands are tied when it comes to the ordinance’s harsh penalties because the ordinance currently states that the tenant “shall” be awarded damages of two times the security deposit plus interest. Under Alderman Reilly’s amendment, judges would have discretion in applying the penalties contained in the CRLTO. Alderman Reilly’s proposal would replace “shall” with “may.” In other words, a judge’s discretion would be guided by the penalty suggested by the ordinance, but would not be limited by it. A judge would no longer be required to impose the large penalty if he or she found it to be unwarranted, such as in the case of an honest mistake or minor infraction.

As an attorney specializing in landlord/tenant law, I believe that this amendment is sorely needed. As a law firm that represents landlords, we have seen first-hand landlords being sued for thousands of dollars over innocent and minor mistakes.

Bradford Miller is an attorney at Bradford Miller Law, P.C. He studied at Illinois State University and abroad at Oxford University prior to earning both his J.D. and a master's degree in real estate law from The John Marshall Law School.

Disclaimer: This article represents the opinion of Bradford Miller and not the opinion of Domu. Domu does not take a position on the proposed amendment. Bradford Miller Law, P.C. is not associated with or endorsed by Domu. This article is intended to supply general information to the public. Please consult with an attorney before acting. It is possible that this article could be considered advertising material in addition to general information. It is not intended to be a solicitation or serve as legal advice.

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