Why does CRLTO compliance matter for landlords?

I know.  Really, I know.  You hate the ordinance.  I hate it too.  I think it is poorly written, contains lots of ambiguities, and is certainly draconian.  The law leaves much room for improvement, however, landlords themselves have brought some of the law’s harshness upon themselves with their past bad acts.  Unfortunately, it is the law.  Landlords need to comply strictly… before it is too late.

When is it too late?  Any time after the lease is signed (sometimes even after it has been offered).

Here’s an example:

Landlord: “The tenant is not paying rent and I need help with an eviction.”
me: “Do you have a security deposit and do keep it in a segregated account?”
Landlord: “Yes, I have a deposit; no, it is not in a segregated account; and why does it matte?”

Ugh.  Can you say quagmire?

CRLTO violations make a Chicago eviction case infinitely more complex.  Delinquent tenants who become aware of their rights can get the upper hand even though they are not paying rent.  This leads to a major conundrum for landlords.  Should the landlord live with the status quo or move forward despite the potential risks.  (The discussion of what a landlord should do when CRLTO violations are likely is a story for another day).

Landlords are sometimes surprised to find out that CRLTO violations make wonderful counterclaims to their eviction lawsuits.  Why?  A few reasons.  First, the Forcible Entry and Detainer Act allows a tenant to request a jury trial as a matter of right.  (If the tenant were to separately sue a landlord for CRLTO violations, in many cases, the claim amount is not high enough to warrant a jury trial).  A jury trial puts a landlord at a disadvantage because jury trials take longer and juries generally don’t like landlords.  Second, although a landlord might be able to offset amounts the tenant owes against a judgment for violations of the CRLTO, it seems that current practice indicates that the tenant’s attorney’s fees are a separate claim against the landlord that cannot be offset against the money the tenant owes the landlord.

For example, if a tenant owes a landlord $5000 and the landlord is sued for $3000 for CRLTO violations, the landlord may “net” a judgment against the tenant for $2000.  However, the landlord will still have to pay the tenant’s attorney’s fees.

Lots of landlords learn about the ordinance only after trouble starts.  This can happen, for instance, at the end of a tenancy.  The landlord knows the tenant did damage to the property and wants to withhold money from the tenant’s security deposit.  If the landlord did not have things in order from the beginning (ie. disclosure of bank where the security deposit is held, payment of interest, keeping the deposit in a segregated account, etc.) it becomes awfully difficult to hold on to that deposit.

Tenants who do not get their deposit back have a reason to look into the laws regarding security deposits.  It is so simple to merely do a google search for information about security deposit return in Chicago.  Tenants quickly learn their rights.  Once they do, the the tide quickly turns and turns badly for the landlord with clear violations.  What was initially a landlord claim for some damage to a cabinet can fast turn into a lawsuit against the landlord for thousands of dollars.

Landlords who are not in compliance will be caught flat footed.  Thinking they were in the “driver’s seat”, they will quickly learn that they are being steam rolled.

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