Slide 1: PROTECTING YOUR LANDLORD CLIENT: A Realtor’s Guide to Landlord-Tenant Law in Chicago
BRADFORD MILLER LAW, P.C. 321 N. Clark, Suite 500 Chicago, IL 60654 Main: 312-238-9298 Fax: 312-379-3163
Introduction: This is meant to be for Realtors and for informational purposes only. Every situation is different so please consult with an Attorney before acting on any information. When Realtors list a condo for rent in the City of Chicago, they need to inform their landlord client that there are many laws that govern the landlord-tenant relationship. Chicago in particular is extremely tenant-friendly, which means landlords need to be extra careful that they always follow the law. In the City of Chicago, the Chicago Residential Landlord Tenant Ordinance (“RLTO”) prevails over most landlord-tenant relationships. Each brokerage office should have on file a “summary” of the RLTO. I highly suggest reading the summary to give you a basic knowledge of the law in Chicago. Also, as a side note, the summary and all of the appropriate riders are on the Chicago Association of Realtors website under Forms/Contracts.
The Chicago Residential Landlord Tenant Ordinance
Every Realtor should have a basic understanding of the Chicago Residential Landlord Tenant Ordinance (“RLTO”) to protect their landlord client. Why? Because if the landlord fails to follow the RLTO, the tenant may be entitled to significant compensation. And if that happens, it’s a safe bet that the Realtor will lose any future business from that landlord. After all, the landlord client will naturally blame the Realtor because they had the listing and most likely provided the lease, etc. I have heard many, many times from angry landlords that their Realtor never told them about the RLTO. The RLTO was enacted in 1986 with the main purpose being to protect and establish tenants rights. Right now, because of the real estate market, many would-be sellers are becoming first time landlords. Instead of selling their property, they are renting it out. And it is typically first time landlords that get in the most trouble, because they often have never heard of the RLTO. TIP: It is a good idea to have an Attorney look over the lease before having the tenant sign it. Paying the Attorney for an hour of their time could end up saving the landlord thousands of dollars later.
This is intended to supply general information to the public. Although the information is generally accurate, it cannot be guaranteed. The nature of the law changes quickly, and people should always insure that legal information is accurate before relying on it. The above information applies the law of the State of Illinois and City of Chicago. This information is necessarily brief and may or may not apply to your situation. In all cases, PLEASE, consult a lawyer before acting. The reader should not consider this information to be an invitation for an attorney-client relationship, should not rely on information provided herein, and should always seek the advice of competent counsel in the reader's state. It is possible that this can be considered ADVERTISING MATERIAL in addition to general information. It is not intended to be solicitation or legal advice.
Slide 2: Generally speaking, the RLTO applies to all landlords except: Dwelling units in owner-occupied buildings containing six units or less; hotels, motels, inns, bed- and-breakfast establishments, rooming houses and boardinghouses, hospitals, convents, monasteries, extended care facilities, asylums or not-for-profit homes for the aged, temporary overnight shelters, transitional shelters, or in dormitories owned and operated by an elementary school, high school or institution of higher learning; A dwelling unit that is occupied by a purchaser pursuant to a real estate purchase contract prior to the transfer of title to such property to such purchaser, or by a seller of property pursuant to a real estate purchase contract subsequent to the transfer of title from such seller; A dwelling unit occupied by an employee of a landlord whose right to occupancy is conditional upon employment in or about the premises; and a dwelling unit in a cooperative occupied by a holder of a proprietary lease.
Common RLTO problems
Security Deposit Issues: See 5-12-080 of the RLTO -According to the RLTO, the landlord MUST put the tenant’s security deposit in a separate, interest bearing account. The interest rate is set forth every year by the City of Chicago. The security deposit should NEVER go into a landlord’s personal account, even if it is only for one day. The landlord and Realtor should ALWAYS ask for the security deposit to be written on a separate check from the rent to prevent it from being seen as co-mingling. The penalty for not properly handling the security deposit is equivalent to two times the amount of the security deposit plus interest! -Another example of where landlords get in trouble is not giving a proper receipt for the security deposit. According to section 5-12-080 of the RLTO, “any landlord or landlord’s agent who receives a security deposit from a tenant or prospective tenant shall give said tenant or prospective tenant at the time of receiving such security deposit a receipt indicating the amount of such security deposit, the name of the person receiving it and, in the case of the agent, the name of the landlord for whom such security deposit is received, the date on which it is received, and a description of the dwelling unit. The receipt shall be signed by the person receiving the security deposit.” Failure to comply with this subsection shall entitle the tenant to immediate return of security deposit and two times the amount of the security deposit plus interest. -Landlords also get in trouble when it comes to paying interest. Generally speaking, interest needs to be paid to the tenant every 12 months – even if the tenant renews their lease. This interest is due within 30 days from the end of the 12 month period. See Section 5-12-080 for the different situations concerning interest on security deposits. Lease Issues -What is the number one common problem REALTORS face with leases? They forget to attach the latest summary of the RLTO. That summary contains vital information that the City of Chicago wants the tenant to have. Realtors also need to attach the latest security deposit interest rate disclosure to each lease. Failure to attach the proper summary can result in a $100 fine
This is intended to supply general information to the public. Although the information is generally accurate, it cannot be guaranteed. The nature of the law changes quickly, and people should always insure that legal information is accurate before relying on it. The above information applies the law of the State of Illinois and City of Chicago. This information is necessarily brief and may or may not apply to your situation. In all cases, PLEASE, consult a lawyer before acting. The reader should not consider this information to be an invitation for an attorney-client relationship, should not rely on information provided herein, and should always seek the advice of competent counsel in the reader's state. It is possible that this can be considered ADVERTISING MATERIAL in addition to general information. It is not intended to be solicitation or legal advice.
Slide 3: for the landlord and gives the tenant the right to terminate the lease upon written notice! In other words, the tenant can basically break their lease anytime they want! Tip: When the tenant is signing the lease, also have them sign their name at the bottom of each page of the RLTO summary and security deposit interest rate disclosure to prove they received it. -Landlords must also disclose their information to the tenant. A landlord or any person authorized to enter into an oral or written rental agreement on the landlord’s behalf shall disclose to the tenant in writing at or before the commencement of the tenancy the name, address, and telephone number of: (a) The owner or person authorized to manage the premises; and (b) A person authorized to act for and on behalf of the owner for the purpose of service of process and for the purpose of receiving and receipting for notices and demands. Failure to comply can give the tenant the right to terminate the lease and possibly one months rent or actual damages whichever is greater. Tip: Landlords CANNOT use a PO Box as their address on the lease. Why? Because this is insufficient for service of process (if they get sued).
General advice for Realtors working with landlords
-Emphasize to your landlord client that Chicago is extremely tenant friendly. Landlords get sued all of the time and almost always lose. Therefore, it is important that they familiarize themselves with the RLTO. -At a minimum, you as their Realtor should familiarize yourself with the RLTO. Every brokerage office should have the latest summary of the RLTO. -Recommend to your client that an Attorney look over the lease for possible RLTO violations. -Keep in mind that if the landlord is sued for RLTO violations, they will likely be angry with YOU and at a minimum you will likely lose them as a client. About our law firm Bradford Miller Law, P.C. focuses on Real Estate Transactions, Landlord Tenant Law, and Estate Planning. If you or your client need legal representation, feel free to contact the office anytime.
BRADFORD MILLER LAW, P.C. 321 N. Clark, Suite 500 Chicago, IL 60654 Main: 312-238-9298 Fax: 312-379-3163
This is intended to supply general information to the public. Although the information is generally accurate, it cannot be guaranteed. The nature of the law changes quickly, and people should always insure that legal information is accurate before relying on it. The above information applies the law of the State of Illinois and City of Chicago. This information is necessarily brief and may or may not apply to your situation. In all cases, PLEASE, consult a lawyer before acting. The reader should not consider this information to be an invitation for an attorney-client relationship, should not rely on information provided herein, and should always seek the advice of competent counsel in the reader's state. It is possible that this can be considered ADVERTISING MATERIAL in addition to general information. It is not intended to be solicitation or legal advice.
