Chicago Association of Realtors says “NO” to Chicago Security Deposits!

chicago security deposit leaseLocal Realtor group recommends Chicago landlords avoid taking a deposit!

The Chicago Association of Realtors just released the 2013 revised version of their Chicago Apartment Lease.  Interestingly, one traditional item is missing from that residential lease.  The Chicago Tribune reported earlier this week (the story is behind a paywall so I have not bothered to link it) that the realtor organization has taken a formal position against the practice of collecting a security deposit from residential tenants with leases governed by the Chicago Residential Landlord Tenant Ordinance!

I had the privilege of consulting with representatives of the association early on in the process of revising their lease form and readers of this blog would probably not be surprised to learn that I agree with their anti-deposit stance.  Here’s is a tiny peek at a portion of the new Chicago lease.  Note that there is no longer even a box available on the top line to write in a security deposit!

CARlease

 

Now, it is probably not true to say there is NO space for the deposit.  If you look just below the apartment address, you will see that there is a space there to include it, if a landlord MUST.  But, the fact that it is relegated to the third box down tells you how far the deposit has fallen!

Just this week, I spoke to realtor Sam Powell of Dreamtown Realty who is on the CAR forms committee and who had a large hand in the CAR lease revision.  As an aside, in my opinion, Sam is one of the finest real estate agents in the City of Chicago when it comes to knowing the leasing laws that affect Chicago landlords.  Sam clarified the CAR position for me when she said:

“As we head into 2014, our Chicago Association of Realtors is advising us as Brokers to further educate our Property Owners turned Landlords about the limitations of protections they are provided in the Chicago RLTO, and advising against taking a  “Security Deposit” and consider charging a flat non-refundable negotiated fee to the tenant to further lower the legal risks put onto our Chicago Landlords.” – Sam Powell

In my personal opinion, this is sound advice.  My readers can find plenty of my own musings on this topic throughout this blog, but suffice it to say that I do not think it is wise for the average Chicago landlord with a property that is going to be governed by the Chicago Residential Landlord Tenant Ordinance to take a security deposit without having a firm and complete understanding of and willingness to comply with the myriad of laws, especially those contained in 5-12-080 of the CRLTO, surrounding the proper care, feeding, and handling of security deposits!  This is doubly true for those “first time landlords” who can’t get their property sold and decide to rent it out to weather the bad market.  Only “professional” landlords should dare take that deposit because the penalties for non-compliance are just too great.

If you are interested in some assistance with the preparation of a Chicago lease, please feel free to contact our attorneys to see if we are a match for an engagement to assist.

This entry was posted in Security Deposit and tagged , . Bookmark the permalink.

4 Responses to Chicago Association of Realtors says “NO” to Chicago Security Deposits!

  1. Travis says:

    Hello, so far I have read some quite effective questions and answers to different situations concerning security deposit. 1.) Would we use Chicago interest rates or Illinois interest rate? 2.)May you give us a formula of how to properly calculate the interest? 3.) Say we have a tenant leasing since an 1, 2011 until current May 20, 2014, security deposit amount uhm say $1000, how would we determine the interest. To my knowledge we would apply interest for each year seperately, is that correct?

  2. Pingback: ATTN: Landlords & Investment Property Owners in Chicago…please read | Chicago Agent Blog