May 9, 2012 2 Comments
There are many new landlords in the City of Chicago. Many condo owners are choosing to rent out their condo but they’re unfamiliar with not only the leasing process but the nuances of the Chicago Landlord and Tenant Ordinance. While I am not an attorney, I am a Realtor in Chicago and have completed more leases than the majority of Realtor’s in Chicago. Here are some basic tips on how to protect yourself as a Landlord when you are preparing the lease.
As always I recommend the use of a Realtor to assist you in leasing out your unit. The expertise we bring not only helps get you top dollar but allows the process to go smoothly and protect you from future loss.
By law you must hold all security deposits in a separate account! This account must be located in the State of Illinois. Furthermore you must place the NAME OF THE BANK AND ADDRESS on the front of the lease! No exceptions!
You also must pay interest on the security deposit. For leases that start and end in 2012 the amount is .057% (yep, not much I know).
How long can a landlord hold onto your security deposit in Chicago?
You can hold the security deposit for no longer than 45days AFTER THE TENANT VACATES THE UNIT. However, if you are withholding any funds from the security deposit you must provide an itemized list of repairs with pricing to your tenant within 30days.
Do I have to change locks in Chicago if I am a landlord?
As a landlord in Chicago (this is new for 2012) you must do one of two things: 1. You need to change the locks for your tenant or 2. You need to give the tenant the right to change the locks. If you do not do one of these items AND state it in the lease you can be held liable if there is any theft from the unit during the term of the lease.
What is the maximum late fee a landlord can charge in Chicago?
The most you can charge in Chicago is $10 for the first $500 of the lease and 5% for everything after that. So, if the lease amount was for $1,100/mo you would charge $10 + 5% of anything above $500, which in this example would be $600. 5% of $600 = $30. Thus $10 + $30 = $40 and would be the maximum late fee you could charge for this lease. This is a 1 time late fee per month.
What Disclosures do I need to provide my tenants?
Good question. You need to provide your tenants with Lead Based Paint Disclosure if the building was built prior to 1978 and if the unit is on the 3rd floor or lower you must provide a Radon Disclosure.
You must give your tenants the Chicago Landlord & Tenant Ordinance
You must give your tenants the “RLTO” which is the Rental Landlord & Tenant Ordinance. It is always a good idea to have the tenant sign a form stating they’ve received the RLTO.
I always recommend full credit & background checks on all tenants including employment verification. Many independent landlords skip this step and rely only on the basic information on an application. It is imperative you run complete checks on your tenants.