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Security Deposit Laws in Illinois

Illinois security deposit laws are complicated and do not provide many protections to tenants. Smaller landlords are particularly unregulated.

Security deposit laws in Illinois are not very tenant-friendly. There’s no cap on how much a landlord can demand for a security deposit, for instance, and the regulations that do exist apply mainly to bigger landlords. Landlords with five or more rental units in one building have between 30 and 45 days to return a deposit; landlords with fewer have no time limit at all. Tenants have the right to interest earned on their deposit—but only if they are renting from a landlord who owns 25 or more rental units.

Security deposits are not capped in Illinois

Illinois places no limits on security deposits. It’s notable that state law does not even provide a strict definition of what a “security deposit” is, or whether it must be refundable. This has led to court disputes over whether, for example, a “move-in fee” may count as a refundable security deposit under the law.1

Only bigger landlords have an obligation to pay tenants interest

If a landlord owns 25 or more units, either in one building or in multiple buildings that are all on the same property, the landlord is required to pay their tenants any interest earned from their security deposits. The interest rate must be equal to (or higher than) what’s offered by the largest commercial bank with its primary headquarters in Illinois on a passbook savings account. At the end of each 12-month rental period, if more than $5 worth of interest has accrued, the landlord has 30 days to either a) pay the tenant out all the interest in cash or b) apply the balance to the next month’s rent.2

If a landlord “willfully” fails to do this, they are liable to the tenant in the amount of the security deposit, plus the tenant’s attorney fees and court costs. “Willfully,” in this case, means the landlord knew they were violating the law and shouldn’t be keeping the interest, but did it anyway.

A landlord cannot withhold funds from a deposit for “normal wear and tear”

According to Illinois law, a tenant is never responsible for “normal” wear and tear on an apartment—even if the lease contains a clause to that effect.3 Some local laws modify the wording slightly by saying that a tenant may not be charged for “reasonable” wear and tear on an apartment.4 There haven’t been many cases in Illinois that discuss the exact definition of this phrase. However, one trial court found that “reasonable wear and tear” means damage caused by normal living, within the confines set by the lease. So, for example, a dent to an archway that is deep and “expensive” to fix would not be considered reasonable wear and tear.5

Beyond the prohibition on charging for normal wear and tear, state law never addresses what the acceptable reasons for deducting from a security deposit might be. Instead, it’s typically determined by the lease. In standard leases, valid reasons for a landlord to withhold money include unpaid rent and—often, but not always—damage caused to an apartment due to misuse by a tenant.

Landlords with five or more units have up to 45 days to return the deposit

Landlords who own five or more rental units in the same building are required to follow certain regulations when returning security deposits. If they don’t intend to deduct any money from the deposit, the landlord must return it within 45 days of the tenant vacating the property. If the landlord is withholding some of the deposit, they must return the money within 30 days—along with an itemized statement explaining the reasons for any deductions.

Although the landlord may estimate the cost of repairs when making the initial deductions, they have to provide actual receipts for the work done within 30 days of sending the statement and refunded deposit. If the cost was less than anticipated, the landlord must also send the tenant the balance owed.

If a landlord doesn’t comply with these rules, they can be sued for double the amount of the security deposit (plus any court costs and attorney fees on the tenant’s part).3

Smaller landlords are only governed by local ordinances

For landlords who own fewer than five units in the same building, Illinois law doesn't set a timeline for the return of the security deposit. Local landlord-tenant lawyers have put together a list6 of the city or town ordinances across Illinois that establish a specific window during which the money must be returned. Otherwise, the general rule appears to be that the return must be done in a “reasonable” time—but no published case law supports this.

[1] Steenes v. Mac Property Management, LLC, 2014 IL App (1st) 120719

[2] 765 ILCS 715

[3] 765 ILCS 710

[4] City of Chicago Residential Landlord and Tenant Ordinance 5-12-080

[5] Boyer v. Buol Properties, 2014 IL App (1st) 132780

[6] "Illinois Security Deposit Law Less Than 5 Units," Brabender Law, LLC

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