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Cook County Security Deposit Law

The landlord-tenant relationship is fraught with potential disagreements commonly related to property conditions, rent increases, unlawful entry and more. However, in my experience as a tenants’ rights lawyer, security deposit disputes are far and away the most contentious. Everyone has had the experience of being a great tenant, leaving no damage, and still losing their deposit to landlord greed. For a long time, landlords in suburban Cook County stole with near impunity, but due to the new Cook County security deposit law, tenants now have robust protection against landlord theft.

In this article, I will discuss the recently enacted Cook County security deposit law, who it applies to, when it goes into effect, and the rights tenants will have starting in the summer of 2021.

Estimated reading time: 11 minutes

Status of the Law Prior to the Cook County Security Deposit Law

Though tenants living within the Chicago city limits have long had the robust protection of the Chicago security deposit law, tenants in suburban Cook County have historically been left out in the cold. Suburban tenants were forced to rely on the Illinois Security Deposit Return Act in the rare cases where it applied or a basic breach of contract claim where it did not.

The Illinois Security Deposit Return Act

Though the Illinois Security Deposit Return Act is not as strong as the Chicago Residential Landlord and Tenant Ordinance, it is much better than having no statutory protection at all. The problem with the Illinois Security Deposit Return Act is that it only applies to buildings with five or more units, and courts have interpreted this to exclude condominium buildings — by stating that five or more units must be owned by the tenant’s landlord. Thus, single family homes, condos, and small rental units receive no protection from the Act. In fact, I am faced with tenants in this situation so often that I wrote an article to answer their questions. It can be found here.

If Cook County tenants were lucky enough to live in a building containing five or more units, they were entitled to receive an itemized list of damages within 30 days of move-out, a return of the deposit within 45 days, and paid receipts for any deductions within 30 days of receiving the itemized list. If a landlord failed to meet these statutory requirements or made improper deductions, the tenant had a claim for twice the amount wrongfully withheld, plus attorney’s fees and case costs.

Breach of Contract Claims

If Cook County tenants lived in a building too small to be protected by the Illinois Security Deposit Return Act, their only option was a breach of contract claim based on the terms of the lease.

Unfortunately, there are a few problems with a breach of contract claim. First, when tenants sign a lease, they seldom read it, often do not understand it, and certainly do not have a lawyer representing their interests. Moreover, the lease is likely a landlord-friendly form produced by a landlord-side lawyer or a landlord organization. Lease terms are far from fair. Leases typically state that the landlord can keep a deposit for reasons far beyond property damage or unpaid rent and almost always state that the tenant will pay the landlord’s attorney fees if there is a dispute. Leases never punish the landlord for misconduct by entitling the tenant to an amount in excess of the deposit, and they seldom entitle tenants to attorney’s fees. At best, some leases that the the winner of any case will get attorney’s fees.

As one can imagine, most security deposit cases are not economical to bring if the tenant will not be awarded attorney’s fees. The average deposit in the Chicago area is between $1,500.00 and $2,000.00. When a tenant is successful in a breach of contract claim, they are only awarded the amount of their deposit, so the sum they can recover is limited. Attorney’s fees can easily exceed the entire value of an average deposit, so there is no economic viability in most security deposit cases based on breach of contract. The case may be more viable in the rare situation where the lease has prevailing party attorney’s fees, but is riskier. This is because the landlord is the prevailing party when the tenant loses, so the tenant pays the landlord’s attorney fees. Thus, the tenant could lose much more than the value of their deposit.

Given the challenges of a breach of contract claim in this context, few tenants sue over their deposit and landlords often get away with theft.

The limited applicability of the Security Deposit Return Act and the serious problems with a breach of contract claim did not go unnoticed by the Cook County Board of Commissioners and, after discussion with representatives from all interested parties, Board drafted the Cook County Security deposit law.

The Cook County Security Deposit Law

Please note: The Cook County Residential Tenant and Landlord Ordinance goes into effect June 1, 2021. Only the anti-lockout provision is immediately applicable.

The Cook County Residential Tenant and Landlord Ordinance (“CCRTLO”) was enacted in early 2021 and provides Cook county tenants with substantial rights. One of the most important rights conveyed is fair treatment of security deposits, similar to the Chicago security deposit law.

Applicability of the Cook County Security Deposit Law

Though the Cook County security deposit law is a huge improvement over the Illinois Security Deposit Return Act and general breach of contract law, it does not apply to all units. The following units are excluded from coverage (from most to least common exclusion):

Most common exclusions:

  • Units outside of Cook County. The CCRTLO only applies to units located in Cook County.
  • Units in Chicago, Evanston, Mt. Prospect and Oak Park. Though the scope of this exclusion is open to some debate, these municipalities have their own tenants’ rights’ ordinances, so they are not covered by the CCRTLO.
  • Commercial and industrial units. Only residential units are covered.
  • Units in owner-occupied buildings of six units or less. If the building contains six or fewer units and the owner of your unit (not other condo owners) lives in the building, the unit is excluded.
  • Some Single units with recent owner-occupants. The CCRTLO does not apply to a single family home or single condo unit in the following situations:
    • The owner is an individual (not a corporation);
    • The owner or an immediate family member resided at the property for at least one month in the 12 months prior to marketing the property; and
    • The owner personally manages the property.

Uncommon exclusions:

  • Transient occupancy in a hotel or motel;
  • Medical, extended care and geriatric facilities;
  • Convents, monasteries, or religious institutions;
  • Overnight or transitional shelters;
  • School dormitories;
  • Structures operated for the benefit of a social or fraternal organization;
  • Units under contract for sale if the occupant is the purchaser;
  • Units in a cooperative if the occupant is a shareholder;
  • Employee accommodations so long as housing is conditional upon employment in or about the premises; and
  • Hotels and motels so long as the occupant has not stayed 32 or more consecutive days and paid rent monthly.

Protections Provided by the Cook County Security Deposit Law

As of June 2021, Cook County provides a number of rights related to security deposits. These include rules regarding return and withholding of security deposits, where and how a deposit may be held, maximum deposit amounts, deposit receipts, and transfer of a deposit.

Withholding and Return of a Security Deposit

The most important provision of the new Cook County security deposit law relates to a tenant’s rights after moving out.

Under the CCRTLO, a landlord may only withhold two things from a security deposit:

  1. Unpaid rent and court costs (but not attorney’s fees) so long as the rent has not been legally deducted in accordance with tenants’ rights under the CCRTLO; and
  2. A reasonable amount necessary to repair any damage caused to the unit by a tenant or a tenant’s guest, so long as the damage is beyond ordinary wear and tear.

It is not permissible for landlords to deduct anything else from a security deposit. If they or she do, it is a violation of Cook County security deposit law.

When landlords deduct for solely unpaid rent, they do not need to do anything further, and they are not required to include provide a statement or accounting.

If landlords deduct money from a deposit for property damage beyond ordinary wear and tear, they have several duties.

First, the landlord must deliver or mail an itemized statement of alleged damages caused to the unit, including estimated or actual repair or replacement costs for each item on the statement. This list must be mailed or delivered to the tenant’s last known address within 30 days of the tenant vacating the unit.

If the landlord does not provide a compliant itemized list, the landlord must return the full deposit (minus any unpaid rent not validly withheld) within 30 days of the tenant vacating the unit.

If the landlord does provide a compliant itemized list, the landlord must return the remainder of the security deposit (minus any unpaid rent not validly withheld) within 30 days of the tenant vacating the unit. If the list contains actual costs, paid receipts are also due within 30 days of the tenant vacating. If the list contains estimated costs, the landlord has an additional 30 days to provide paid receipts.

If a landlord withholds a deposit and does not comply with the Cook County security deposit law, the tenant is entitled to a penalty of two times the deposit, return of the deposit itself, plus attorney’s fees and case costs.

Fair Treatment of a Security Deposit in Cook County

In addition to the rules regulating deductions from Cook County security deposits, the Cook County security deposit law also regulates several other aspects of a deposit.

Maximum Size of a Security Deposit

In Cook County, a landlord may not demand or collect a security deposit that exceeds 150% of monthly rent. Additionally, a landlord may also not try to avoid this limit by labeling a charge as anything other than a deposit.

If a landlord collects a security deposit of between 100% and 150% of rent, the tenant has the power to choose when to pay the amount exceeding 100% so long as it is paid in full across no more than six equal installments and no later than six months after the lease’s effective date.

If a landlord demands or collects an excessive deposit or does not allow a tenant to choose when to pay any deposit exceeding 100% of monthly rent, the tenant may claim a penalty of two times the deposit, plus attorney’s fees and case costs.

Where a Deposit Is Held

A Cook County landlord may not do whatever they like with a security deposit. The Cook County Residential Tenant and Landlord Ordinance specifies how a deposit must be held.

When a tenant pays a security deposit, the landlord must provide the tenant with a security deposit receipt. This receipt must contain the amount of the deposit, the name of the person receiving it, the name of the landlord, the date the deposit was received, a description of the dwelling unit, and the signature of the person receiving the deposit. If the deposit is paid electronically, the landlord may instead provide an electronic receipt that contains a description of the dwelling unit and the electronic or digital signature of the person receiving the deposit.

A landlord who collects a security deposit must keep the deposit in a federally insured financial institution located in the state of Illinois. The deposit must not be commingled with the landlord’s own funds and may not be made subject to claims of the landlord’s creditors including a foreclosing bank or bankruptcy trustee.

The tenant’s signed copy of the lease must also include the name of the bank that will hold the deposit. If the landlord later moves the deposit to a new bank, the landlord has 14 days (or a reasonable time) to provide the tenant with written notice of the transfer.

If a landlord sells or otherwise transfers ownership or control of the unit, the successor landlord must provide the tenant with written notification, within 14 days of the transfer, that the deposit was transferred to the successor and that the successor is holding the deposit. The written notice must also contain the name, business address, and business telephone number of the successor landlord and their agent.

When ownership or control is transferred, the successor landlord is liable for any deposit paid to the original landlord. Moreover, the original landlord is also liable for the deposit unless the original landlord transfers the deposit to the successor and provides written notice to the tenant within 10 days of the transfer. The written notice must contain the name, business address, and business telephone number of the successor landlord or their agent.

If a landlord fails to provide a security deposit receipt, the tenant is entitled to immediate return of the security deposit.

If a landlord fails to comply with any duty discussed in this section; and does not cure the violation within two business days of receiving written notice, the tenant has a right to recover a penalty of two times the deposit, plus attorney’s fees and case costs.

Summary of Cook County Security Deposit Law

Historically, tenants outside of the Chicago city limits had very little protection for their security deposits. Tenants in larger buildings had the protection of the Illinois Security Deposit Return Act, but most had to rely on breach of contract law – which was largely ineffective.

Starting June 1, 2021, the new Cook County security deposit law, found within the Cook County Residential Tenant and Landlord Ordinance is in effect. This new law provides tenants with many rights and remedies, including robust protection against security deposit theft.

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