Anyone who’s seen the resources for landlords or renters on this site can attest that there are risks to renting an apartment in Chicago. Some of the legal risks for landlords stem from the protections under the Chicago Residential Landlord and Tenant Ordinance (CRLTO). Typically, it’s the part-time landlords who end up in hot water. Although tenants can get themselves into a heap of trouble, too. And for Chicago apartment renters, relying on the informal designation of a "roommate" is one of those tricky areas.
There’s technically no such thing as a “roommate” from the legal standpoint. Anyone who lives in a dwelling unit is either an owner, a landlord, a tenant, a sublessor, or a sublessee. Each of these persons has defined rights and duties under the CRLTO, which cannot be evaded merely by classifying someone as a “roommate.”
With that in mind, let's look at a real world example from a past court case. The details are changed to protect the identity of any individuals who were actually involved in the case, however the point is still instructive to people who are seeking roommates for their Chicago apartment.
It all started with someone we'll call Daniel, a graduate student at a local university. Daniel was renting a 2 bedroom apartment in a Gold Coast brownstone with one of his classmates. Both of them signed the lease as co-tenants and lived in the apartment for a year without incident. At the end of the term, Daniel’s roommate moved out. But Daniel liked the location and wanted to stay put for another year. So he signed a new lease as the sole tenant and put down a new security deposit, then privately resolved to find a new roommate to help defray his costs. About three months into the lease he met Peter, an old friend from the suburbs who wanted to move downtown. Daniel convinced Peter to move in with him until he found his own place. Peter never signed the existing apartment lease between Daniel and the landlord, and Daniel never informed the landlord of Peter’s existence. The whole thing was very informal. Peter agreed to pay Daniel (not the landlord) half the rent for each month he remained there, and he also wrote Daniel a check for half of the security deposit. Daniel never sent the security deposit to the landlord. Instead, he deposited the funds into his own bank account.
About three months after he moved in, Peter found an apartment for rent in Streeterville. He was so anxious to settle into his new digs that he moved out of Daniel’s place even though he’d already prepaid for a few weeks when he would no longer be there. He then asked Daniel to refund his security deposit, but Daniel was upset that Peter gave him only a few weeks’ notice of his departure, so he retained the money. This enraged Peter, who had no formal lease and no formal “notice” provision. Peter enlisted the help of a lawyer to send Daniel a “nasty-gram.” Daniel refused to budge and a lawsuit ensued.
Peter filed an action against Daniel for violating the Residential Landlord and Tenant Ordinance by failing to provide his “subtenant” with the required disclosure forms, failing to provide his “subtenant” with a proper security deposit receipt, improperly commingling the security deposit funds, and failing to refund the security deposit within 45 days. In his hope for relief, Peter sought the entire array of statutory damages, including two times the amount of the security deposit, plus interest, court costs and attorneys’ fees.
At trial, Daniel’s attorney argued that the Residential Landlord and Tenant Ordinance does not apply to “roommates,” but the argument held no sway with the judge, who interpreted the statute exactly as written. This was how the judge reasoned:
- The apartment was not “owner-occupied” because the actual owner lived in the suburbs at the time. Therefore, the unit in question was not exempt from the municipal ordinance. (section 5-12-020.)
- Peter was not a party to the lease between Daniel and the landlord, and the lease was never amended to include him.
- Peter paid his rent money directly to Daniel, and Daniel paid the owner.
- Peter gave Daniel a security deposit, and Daniel never forwarded those funds to the owner.
- The ordinance defines a “landlord” as an “owner, agent, lessor or sublessor, or the successor in interest of any of them.” (Section 5-12-030.)
- By collecting rent from Peter, rather than placing Peter in direct privity with the owner by adding him as a signatory to the lease, Daniel acted as a sublessor, and Peter became his sublessee (or subtenant).
- Whether they called themselves “roommates” or could be characterized as “roommates” was utterly irrelevant, and, for legal purposes, Daniel was a sublessor and Peter was a subtenant.
- Because the ordinance defines a landlord to include any person who serves as a sublessor, Daniel was required to follow all the requirements of the Residential Landlord and Tenant Ordinance.
Needless to say, things ended badly for Daniel, who believed he was simply doing a favor for an old friend by inviting him to become a “roommate” in his Chicago apartment. But the kicker is that there's no such thing as a “roommate” under Chicago law. A roommate is a either a tenant or a subtenant. The moral of the story is that anytime you provide a “dwelling unit” in exchange for payment, you're going into the apartment renting business and incurring a risk of substantial liability if you fail to follow the provisions of the Chicago Residential Landlord and Tenant Ordinance.