A new case published on October 14, 2011 by the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division indicates that a judgment obtained by a tenant against a landlord for various violations of Section 5-12-080 of the Chicago Residential Landlord Tenant Ordinance is not dischargeable in bankruptcy as it constitutes “defalcation while acting in a fiduciary” under 11 U.S.C. Section 523(a)(4). The case is Kennedy v. Frempong and was issued within the broader federal Bankruptcy case: In re Maxwell Kofi Frempong as adversary case 10 A 011773.
Security Deposit
Illinois Security Deposit Return Act amended to protect tenants from foreclosure
The Illinois Security Deposit Return Act was amended over the weekend. House Bill 1674 amends both the the Illinois Mortgage Foreclosure Law and the Illinois Security Deposit Return Act. The law is intended to protect the security deposits of tenants whose landlords go into foreclosure by first amending the foreclosure law to require that for mortgaged real estate, a court ordering a Sheriff’s foreclosure sale shall also require that the foreclosed property owner shall transfer all security deposits received and interest thereon to the foreclosure purchaser along with an accounting of the deposits that includes the name and address of each tenant whose money is held.
Nonrefundable application fees
Many Chicago landlords use nonrefundable fees to avoid the application of the CRLTO security deposit rules. Instead of taking a security deposit and holding it subject to the CRLTO rules, landlords take an administrative fee that is nonrefundable.
What Should a Landlord do if a Tenant’s First Security Deposit & Rent Check Bounces?
In most cases, trouble with tenants usually begins some time after the tenant has paid the first month’s rent and a security deposit. There are times, however, when a tenant “breaks bad” right off the bat and bounces the initial check or checks given to the landlord.
Before getting too deep into the topic, lets examine the state of the law in Chicago.