Rules for Rental Agreements under the CCRTLO

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Section 804 – Rental Agreements

After a bit of a break to get landlords back in the game in the fight against rent control, it is finally time to get into the meat of the new Cook County Residential Tenant and Landlord Ordinance (CCRTLO).  We’ll take a look at Section 42-804 which governs leases and rental agreements.  Section 5-12-140 of the CRLTO has a nine point section governing rental agreements but the CCRTLO goes much further.

Unless exempt,

1. All rental agreements must comply with the CCRTLO regardless of their term.  Parties to a lease may contract for rights and remedies not otherwise prohibited by the CCRTLO (rent, length of term, and other rights and obligations of the parties). (42-804(A))

2. All rental agreements must contain the full names of all known occupants of the dwelling unit leased or to be leased under the rental agreement.  The individual occupancy of the dwelling unit shall in no case exceed the maximum occupancy permitted elsewhere in applicable building codes for that size unit.  The CRLTO contains nothing like this.  However, the Oak Park landlord tenant regulations have a similar provision that requires all occupant names (and birth dates) and a formal statement of the maximum occupancy permitted in the dwelling unit.  The CCRTLO doesn’t go that far and requires only full names of occupants, which should really be on a well written lease anyway.  Landlords who want to be on the right side of a fair housing claim for familial status should also be aware of their rental unit’s maximum allowed occupancy. (42-804(B))

3. Now we get into silly-town. The CCRTLO provides that rent is payable at the time and place agreed upon by the parties (what a concept). Unless landlord and tenant make other arrangements, the CCRTLO mandates that rent is payable at the dwelling unit at the beginning of any term of one (1) month or less and, otherwise, in equal monthly installments at the beginning of each month. Unless otherwise agreed, rent shall be uniformly apportionable from day to day. (42-804(C))

4. If a tenant pays weekly, the tenancy will be presumed to be a week-to-week tenancy unless the parties otherwise agree and in all other cases, the tenancy will be considered month-to-month.  (42-804(D))

5. Under normal circumstances, where a landlord and tenant have entered into a written rental agreement, the landlord should provide the tenant a copy of a signed lease to the tenant.  The CCRTLO provides that if a landlord (1) fails to sign or (2) fails to deliver the written agreement to the tenant, but the landlord accepts rent (without some form of reservation by the landlord), the unsigned or undelivered written rental agreement will be in force as though the landlord had signed and delivered the written rental agreement to the tenant.  (42-804(E)(1)) Conversely, if the landlord and tenant agreed to a written rental agreement but the tenant (1) fails to sign or (2) fails to deliver the written agreement to the landlord, but the tenant accepts possession and pays of rent (without reservation), the unsigned rental agreement will be in force as though the tenant signed and delivered the written rental agreement to the landlord. (42-804(E)(2))  Any rental agreement that is granted “life” by this section shall have a term of one (1) year. (42-804(E)(3)).  It’s this third part that is difficult, right?  What if the lease that the landlord never signed and returned to the tenant was for a six month term (because that’s all the tenant wanted!)? It sounds like the landlord would be able to force a 1 year term out of that lease and vice versa.  This feels like a well intended provision that is going to have unintended bad consequences.

6. The ordinance next provides a laundry list of prohibited provisions that cannot be part of a lease governed by the CCRTLO.  This list is similar, albeit expanded, to the list in 5-12-140 of the CRLTO.

Basically, a rental agreement must not provide that the tenant or the landlord:

  1.  Agrees to waive or to forego rights or remedies under this Article, Illinois state law, or federal law; (42-804(F)(1))  This goes beyond the CRLTO Section 5-12-140(a) which only mentions itself.  The CCRTLO mentions Illinois and federal law as well.
  2. Authorizes a confession of judgment, or any entry of a judgment by a court without written notice or a trial, for any claim, including but not limited to debts, liabilities, damages, and obligations, arising out of the rental agreement; (42-804(F)(2))  This is similar to the 5-12-140(b) of the CRLTO.
  3. Agrees to a waiver of (1) any written termination of tenancy notice or manner of service thereof provided under state law or this Article, summons, copy of complaint, petition, right to notice, motion, entry of appearance, or other documents from the court as established through judicial process in the manner provided by the Illinois Code of Civil Procedure, 735 ILCS 5/2-201, et seq., or any action, regardless of good cause or cost;  (42-804(F)(3)) This is an expanded version of 5-12-140(c) which only referenced termination of tenancy or manner of service.  There was a time where a tenant in a suburban locale could be asked to waive the right to notice and judges would enforce those provisions just like they would in a commercial lease.  No more.
  4. Agrees to a non-disparagement clause that limits any written or oral statements, remarks, or other communications, public or private, directly or indirectly, made by tenants regarding the landlord, property, management, staff, officers, directors, representatives, investors, shareholders, administrators, affiliates, employees, affiliated corporations, divisions, or subsidiaries;
  5. Agrees to the limitation of any liability of the tenant or landlord arising under law or to indemnify the tenant or landlord for that liability or the costs connected therewith;  This is similar to the 5-12-140(c) of the CRLTO, albeit expanded to add tenants and the obligation to indemnify for costs connected to same.
  6. Agrees to waive the right of any party to a trial by jury;  This is the same as 5-12-140(e) of the CRLTO.
  7. Agrees that in the event of a lawsuit arising out of the tenancy the tenant will pay the landlord’s attorney’s fees except as provided for by court rules, statute or Ordinance. This paragraph shall also apply to a mobile home owner who, as a tenant, rents a manufactured home lot in a mobile home park as the terms “tenant”, “manufactured home” or “mobile home,” “lot,” and “mobile home park,” are defined or used in the Mobile Home Landlord and Tenant Rights Act, 765 ILCS 745 et seq.  You guessed it, this is just like 5-12-140(f) with the addition of protection for mobile home leases.
  8. Agrees that either party may cancel or terminate a rental agreement at a different time or within a shorter time period than the other party, unless such provision is disclosed in a separate written notice.  This the same as 5-12-140(g) of the CRLTO.
  9. Agrees that a tenant shall pay a charge, fee or penalty in excess of $10.00 per month for the first $1,000.00 in monthly rent plus five (5) percent per month for any amount in excess of $1,000.00 in monthly rent for the late payment of rent. This paragraph shall also apply to a mobile homeowner who, as a tenant, rents a manufactured home lot in a mobile home park as the terms, “tenant”, “manufactured home” or “mobile home,” “lot,” and “mobile home park,” are defined or used in the Mobile Home Landlord and Tenant Rights Act, 765 ILCS 745 et seq.  This is similar to the 5-12-140(h) of the CRLTO except that the amounts charged are different.  In Chicago, a late fee on $1000 of monthly rent would be $35.  In Cook County, that late fee would be $10.
  10. Agrees that a tenant shall receive a discount in excess of $10.00 per month for the first $1,000.00 in monthly rent plus five (5) percent per month for any amount in excess of $1,000.00 in monthly rent if the tenant pays rent before a specified date or within a specified time period in the month.  This is the inverse of the late fee prohibition and is similar to 5-12-040(i) with the Cook County rates.
  11. Agrees that a landlord may apply rent payments to a charge other than rent, including but not limited to utilities, fines, late fees or other charges.  This one is totally new.  Many landlords would indicate that rent paid would first be applied to late fees or other amounts outstanding.  No more.  This sets up a system where a tenant could pay rent late every month and could fail to pay for utilities and the landlord can’t apply the tenant’s rent payments to those amounts.
  12. Agrees that the landlord shall not impose a fee in excess of the reasonable cost of that expense, including, but not limited to, credit-check fees and move-in fees. A landlord shall not rename a fee or charge to avoid application of this prohibition.  This one is new as well and is the death of the non-refundable move in fee.  Supporters of the CCRTLO say “we didn’t kill the non-refundable move-in fee”.  They’re not telling the truth.  Here lies the non-refundable move-in fee.  Guess what – rents will need to increase to make up for the risk of taking a deposit and the inability of landlords to take a move-in fee.

7. A landlord has no right to enforce a provision prohibited by any part of Section 804.  If a landlord “deliberately uses” a rental agreement containing any provision known by the landlord to be prohibited, the tenant may recover actual damages or two (2) months’ rent, whichever is greater.  I’m concerned with the phrase “deliberately uses”.  The CRLTO provides in 5-12-140 that “If the landlord attempts to enforce a provision in a rental agreement prohibited by this section the tenant may recover two months’ rent.”  So the Chicago ordinance says a landlord has liability if the landlord “attempts to enforce” and Cook County says a landlord has liability if the landlord “deliberately uses”.  It will be interesting to see if the word “use” in the Cook County ordinance merely means the landlord uses a lease (as in “this is the lease I use”) or it means using the lease to obtain some effect from the tenant (as in “you are trying to use an illegal provision by attempting to enforce it”).  (42-804(G))

8. The ordinance makes clear that the in Section 804(F) (ie. the prohibited provisions) will apply only to new rental agreements beginning on or after June 1, 2021.  So a one year lease entered into on January 1, 2021 will not yet have to comply.  (42-804(H))  Note, that means the prohibition on ITEMS IN 804(F) are not applicable to leases signed before June 1, 2021.  What about the OTHER requirements of the CCRTLO?  We don’t know.

So, what are the big ones here?  Besides the usual anti-landlord Chicago provisions incorporated into the law, we have the end of the non-refundable move-in fee as we know it, we have the change in late fees, and we have the rent apportionment provision.  If I put my Carnac the Magnificent hat on for a second, I might suggest that the Chicago City Council will amend the CRLTO to meet the same requirements as the CCRTLO on these three issues at a minimum.  These provisions will hurt landlords in the long run.