Chicago landlords burdened with high levels of liability have left behind the security deposit and are instead utilizing move in fees.
Security deposits may soon be grouped with dial up Internet and landline phones as an antiquity in rental properties.
The Chicago Association of Realtors withdrew its support of security deposits in January 2014 because the deposits put landlords at such a risk.
In the past there have been issues with landlords misusing security deposits. As time passed tenant protections were put in place to guard against this behavior, one of them being landlords must put the deposits into interest bearing accounts. These accounts rarely earn more than even a dollar in interest because of low rates.
Currently, a landlord must provide a tenant with an itemized list of damages within 30 days of their move-out date before subtracting any expenses. They must also return the security deposit and interest that it has earned minus unpaid rent and expenses within 45 days of the tenant moving out.
If a landlord is late sending a check for a security deposit to a tenant there can be up to thousands of dollars in fines. The fines can include amounts equal to two times the security deposit plus interest plus attorney fees and court costs.
Landlords are subject to an environment filled with risk and litigation if they utilize security deposits. This out of proportion liability has created the decline of the deposits.
While the Rental and Landlord Ordinance in Chicago does not require or prohibit security deposits, landlords that do use them must adhere to the strict guidelines mentioned previously.
Move in fees are now taking the place of security deposits. The fee is a one time and non-refundable, but is usually less than a security deposit. Even though a move in fee is not refundable new tenants perceive their total upfront cost as less and therefore these leased spaces are cheaper to initially access.
As a Property Management company in Chicago, Letts Property Management agrees with the Chicago Association of Realtors on the subject of security deposits. We believe that liability is too heavily placed on landlords, but currently still collect security deposits for our owners.