Illinois appellate court clarifies penalty for failure to disclose code violations under section 5-12-100

crltolitA new Chicago Residential Landlord Tenant Ordinance opinion was just recently issued by the first district Illinois Appellate Court.  In the case Ranjha v. BJBP Properties, Inc., a tenant sued a landlord in a class action related to the landlord’s failure to disclose City of Chicago Building Code citations and violations for the twelve months prior to the lease and sought damages equal to one month’s rent or the tenant’s actual damages.

Before we get into the procedure and ruling, let’s look at the section in question.  Section 5-12-100 says:

Before a tenant initially enters into or renews a rental agreement for a dwelling unit, the landlord or any person authorized to enter into a rental agreement on his behalf shall disclose to the tenant in writing:

(a) Any code violations which have been cited by the City of Chicago during the previous 12 months for the dwelling unit and common areas and provide notice of the pendency of any code enforcement litigation or compliance board proceeding pursuant to Chapter 13-8-070 of the municipal code affecting the dwelling unit or common area. The notice shall provide the case number of the litigation and/or the identification number of the compliance board proceeding and a listing of any code violations cited.

(b) Any notice of intent by the City of Chicago or any utility provider to terminate water, gas, electrical or other utility service to the dwelling unit or common areas. The disclosure shall state the type of service to be terminated, the intended date of termination, and whether the termination will affect the dwelling unit, the common areas or both. A landlord shall be under a continuing obligation to provide disclosure of the information described in this subsection (b) throughout a tenancy.

If a landlord violates this section, the tenant or prospective tenant shall be entitled to remedies described in Section 5-12-090.

So, a landlord has to make the disclosure of code violations or code enforcement litigation or compliance board proceedings to the tenant before the tenant enters into or renews a rental agreement.  When a landlord violates the section, the tenant is entitled to the same remedies as in a violation of 5-12-90 which says, in part:

…If the landlord fails to comply with this section, the tenant may terminate the rental agreement pursuant to the notice provisions of Section 5-12-110(a). If the landlord fails to comply with the requirements of this section after receipt of written notice pursuant to Section 5-12-110(a), the tenant shall recover one month’s rent or actual damages, whichever is greater.

So, for violating either Section 5-12-090 or 5-12-100, a tenant can recover one month’s rent or actual damages after a landlord fails to comply with the written notice required by Section 5-12-110(a).  That section of the code says:

(a) Noncompliance By Landlord. If there is material noncompliance by the landlord with a rental agreement or with Section 5-12-070 either of which renders the premises not reasonably fit and habitable, the tenant under the rental agreement may deliver a written notice to the landlord specifying the acts and/or omissions constituting the material noncompliance and specifying that the rental agreement will terminate on a date not less than 14 days after receipt of the notice by the landlord, unless the material noncompliance is remedied by the landlord within the time period specified in the notice. If the material noncompliance is not remedied within the time period so specified in the notice, the rental agreement shall terminate, and the tenant shall deliver possession of the dwelling unit to the landlord within 30 days after the expiration of the time period specified in the notice. If possession shall not be so delivered, then the tenant’s notice shall be deemed withdrawn and the lease shall remain in full force and effect. If the rental agreement is terminated, the landlord shall return all prepaid rent, security and interest recoverable by the tenant under Section 5-12-080.

And here is where it gets confusing.  5-12-110(a) says that a tenant can send a landlord a notice specifying the noncompliance and specifying that the lease will terminate 14 days after receipt of the notice unless the landlord cures the noncompliance.  The 110(a) notice seems to indicate that the tenant’s remedy and part of what must be done is to send a 14 day notice to terminate the lease.

The landlord jumped on this ambiguity.  At the trial court, the landlord brought a motion to dismiss the claim because the tenant had not sent a notice to terminate the tenancy as required by the language in 110(a).  The trial court agreed.  The tenant appealed and the appellate court reversed the decision.

In the appeal, the tenant argued that lease termination and delivery of possession are not required to recover the remedy of one month’s rent or actual damages.  The landlord argued that in order to be entitled to the penalty, the tenant must surrender and deliver possession of the rental property to the landlord.  The appellate court indicated that both the landlord’s position and the tenant’s position are reasonable, but decided to rule in favor of the tenant.

The court agreed that a written notice is required to obtain the remedy of one month’s rent or actual damages and acknowledged the disconnect and ambiguity between section 5-12-090 and the notice requirement in section 5-12-110(a).  The court indicated that the CRLTO is to be liberally construed.  As such, the court found that what section 5-12-110(a) requires is for the tenant to send a written notice informing a landlord of material noncompliance and specifying the remedy that the tenant is seeking (be it termination or a money damages penalty).  The court specifically held:

In essence, section 5-12-110(a) should then be interpreted as follows: “the tenant under the rental agreement may deliver a written notice to the landlord specifying the acts and/or omissions constituting the material noncompliance and specifying that the tenant shall recover one month’s rent or actual damages, whichever is greater on a date not less than 14 days after the receipt of the notice by the landlord, unless the material noncompliance is remedied by the landlord within the time period specified in the notice.

This case is instructive to landlords on a number of levels.  First, it again exposes just how important CRLTO compliance is.  Landlords who thumb their noses at the ordinance find themselves in court and sometimes even find themselves involved in serious class action litigation.  Second, he case shows how the appellate courts can construe the ordinance in favor of tenant protections.  Landlords rarely win their CRLTO cases on technicalities.  The courts go to great lengths to carry out the intent of the City of Chicago to protect tenants.  Landlords who walk close to the edge can fall off the edge.

The CRLTO is not the most elegant piece of legislation ever drafted.  It contains MANY ambiguities.  It contains MANY unclear provisions.  Landlords need to read the ordinance in light of its stated purpose to stay on the safer side of this law.

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