Security Deposits

The Chicagoland Apartment Association publishes this as a public service. It is meant to inform and not to advise. Before enforcing any rights or remedies you may want to seek the advice of an attorney who can better analyze the specific facts of your case.

Residential Landlord & Tenant Ordinance (RLTO) Requirements

Receiving A Security Deposit
  • Security deposits must be held in a federally insured interest-bearing account in an Illinois bank.
  • Security deposit and interest shall not be commingled with the landlord’s assets, except:
    • 1) Landlord my accept payment of first month’s rent and security deposit in one check or electronic funds transfer, provided that within 5 business days of acceptance the landlord transfers the security deposit into the required separate account. (eff. 10/8/2010)
    • 2) Landlord is not commingling if there is excess interest in the security deposit account. Excess interest is the amount of money in excess of the total amount of the security deposits plus any interest due thereon. (eff. 10/8/2010)
  • Landlord must give a signed and dated receipt for the security deposit that includes: deposit amount; name of person receiving deposit [if an agent, name of the landlord]; date on which it is received and a description of the unit.

If the security deposit is paid by electronic transfer, landlord my provide receipt specified above or an electronic receipt with the same information as required above and an electronic signature as defined in 5 ILCS 175/5-105. (eff. 10/8/2010)

Landlord shall include the name and address of the financial institution where the security deposit will be deposited on the written lease, if there is no written lease, landlord shall notify the tenant of the name and address of the financial institution where the security deposit was deposited within 14 days of receipt of the security deposit. (eff. 10/8/2010)

Interest Payments
  • Interest must be paid on security deposits and prepaid rent (eff. 1-1-92) held more than 6 months at a rate set by the City based on the year in which the lease agreement is entered or renewed.
  • Interest must be paid to the tenant by check, or credit on rent due, within 30 days after the end of each 12-month rental period.
  • Interest accrues from the beginning date of the rental term.
  • The City Comptroller sets the rate of interest (eff. 7-1-97) in January of each year.
Interest Rates in City of Chicago
2015 - 2020 0.01 % 2014 - 0.013%
2013 - 0.023% 2012 - 0.057% 2011 - 0.073%
2010 - 0.073% 2009 - 0.12% 2008 - 1.26%
2007 - 1.68% 2006 - 1.71% 2005 - 1.01%
2004 - 0.42% 2003 - 0.52% 2002 - 0.83%
2001 - 3.10% 2000 - 2.71% 1999 - 2.63%
1998 - 3.38% prior to July 1, 1997 5.00%
Security Deposit Return
  • Landlord or Successor Landlord (eff. 6/9/2010) must return a security deposit and interest within 45 days [7 days in the event of fire or casualty (eff. 1-1-92)] after the tenant moves out.
  • Landlord may deduct from the security deposit or interest for:
    • Any unpaid rent which has not been validly withheld; and
    • Reasonable amounts necessary to repair damage caused by the tenant or his guests
  • When deducting for damages the landlord must, within 30 days, deliver an itemized statement of the damages to the last known address of the tenant.  It must include:
    • Estimated or actual cost for repairing or replacing each item
    • In the case of actual costs, copies of paid receipts for the repair or replacement
    • In the case of estimated costs, the landlord must provide copies of paid receipts or a certification of actual costs if the landlord’s employees perform the work, within 30 days from the date of the initial itemized statement.
Building Transfer
  • Upon sale, lease or transfer of a building, a landlord or successor (including lien holders)  (eff. 6/9/2010) who received a security deposit or prepaid rent is liable to that tenant for those monies, including interest.
  • Within 14 days (eff.10/8/2010), the successor landlord shall give the tenant written notice of the security deposit or prepaid rent transfer. Notice must include the successor landlord’s name, business address, and business telephone number of the successor landlord’s agent, if any.
  • Transferor remains jointly and severally liable with the successor landlord for the security deposit or prepaid rent, until it is transferred and the transferor provides written notice of the transfer to the tenant, within 10 days, specifying the name, business address and business telephone number of the successor landlord or his agent. (eff. 1-1-92)
Failure to Comply
  • Failure to provide a security deposit receipt entitles the tenant to immediate return of the security deposit.
  • If a landlord fails to comply with any of the security deposit requirements, the tenant shall be awarded damages of twice the security deposit plus interest, as well as other damages the tenant may otherwise be entitled to.
  • If landlord pays interest on security deposit or prepaid rent on time, but the interest amount if deficient, landlord shall not be liable for damages unless: 
    • Tenant gives written notice to landlord of the deficiency; and
    • Within 14 days of receipt of this notice, landlord fails to either: 
      • Pay tenant correct interest plus $50.00; or 
      • Provide tenant with a written response explaining interest calculation (note: if a court finds the interest calculation was not accurate, landlord will pay twice the security deposit plus interest as damages.)
    Best Practices
    • The security deposit cannot be used as a substitute for last month’s rent, unless both the landlord and the tenant agree and it is best to have this agreement in writing.
    • Inspecting the unit with the tenant prior to move-in and at move-out and keeping a written record of its condition helps the landlord when returning the security deposit.
    • Provide all required notices and receipts in writing and maintain copies for your records.
    • The landlord may determine the amount of security deposit or prepaid rent required, but remember to do so consistently and without discrimination in accordance with the Chicago Fair Housing Ordinance.
    The Chicago Residential Landlord and Tenant Ordinance (RLTO) governs tenancy in ALL residential units in Chicago except units:
    • In owner-occupied buildings containing six units or less;
    • In hotels, motels, inns, tourist houses, rooming houses and boardinghouses, but only until such time as the dwelling unit has been occupied by a tenant for 32 or more continuous days and tenant pays a monthly rent; 
      In a hospital, convent, monastery, extended care facility, asylum or not-for-profit home for the aged, temporary overnight or transitional shelter, or dormitory;
    • Occupied by a purchaser or seller pursuant to a real estate purchase contract prior to or subsequent to such transfer of title;
    • Occupied by an employee of a landlord whose right to occupancy is conditional upon employment in or about the premise; or
    • In a cooperative occupied by a holder of a proprietary lease

    Provisions of the RLTO took effect on November 6, 1986 unless otherwise specified in parenthesis.