6 Basics of Illinois' Security Deposit Law
How Much to Charge and Procedures for Return
All landlords and tenants in the state of Illinois should be familiar with the landlord tenant laws in the state. One specific area to understand involves the guidelines for security deposits. Here are six basic rules about security deposits in Illinois.
6 Basics Questions About Security Deposits in Illinois:
- Security Deposit Limit- None
- Storing Deposit- Under 25 Units: No Requirements. Over 25 Units: Interest Bearing Account
- Written Notice- Not Required
- Keeping Deposit- Unpaid Rent, Damage, Utility Bills, Cleaning Costs, Other Lease Breaches
- Returning Deposit- 30 Days if Deductions, 45 Days if No Deductions
- Selling Property- Must Transfer Deposits to New Owner
1. Illinois Security Deposit Limit
The state of Illinois does not set a limit on the maximum amount a landlord can collect from a tenant as a security deposit.
2. Rules for Storing Deposits in Illinois
Landlords With Fewer Than 25 Units:
Illinois landlords who own fewer than 25 units do not have to follow any specific laws for storing a tenant's security deposit while it is in their possession.
Landlords With 25 Units or More:
Illinois landlords who own 25 rental units or more must pay tenants interest on their security deposit, if the following two criteria are met.
- The 25 rental units are located in one building or complex.
- The landlords keeps the tenants security deposit for longer than six months.
The interest must be paid according to the following rules:
- This interest rate must be equal to the interest rate paid on minimum deposit savings accounts by the largest commercial bank in Illinois.
- The interest earned must be paid to the tenant within 30 days of the end of each 12-month lease term. The landlord can either pay the tenant this amount or credit it toward the tenant’s next month’s rent.
- A landlord is not required to pay a tenant the interest if the tenant has defaulted on their lease.
Failure to comply with this law may result in a landlord having to pay the tenant their entire security deposit, plus applicable court costs and lawyer fees.
3. Is Written Notice Required After Receipt of the Security Deposit in Illinois?
In Illinois, a landlord is not required to provide a tenant with written notice after receipt of the security deposit.
4. Reasons Illinois Landlords Can Keep a Tenant's Security Deposit
In Illinois, you may be able to keep all or a portion of a tenant’s security deposit to cover:
5. Returning a Tenant’s Security Deposit in Illinois
Landlords who own five or more units in the state of Illinois have two options for returning a tenant's security deposit:
- 30 Days- If a landlord plans on making deductions from a tenant’s security deposit, the landlord has 30 days from the date the tenant moved out to do so. Within 30 days of the tenant moving out, the landlord must give the tenant written notice, by mail or by personal delivery, as to their intention to keep all or a portion of the tenant’s security deposit.
- This notice must include:
- An itemized statement of deductions.
- This notice must include:
- Actual or approximate cost to fix the damage.
- Copies of any receipts or invoices.
- -If the work has not yet been completed and an estimated cost is written, the landlord has an additional 30 days after submitting the written notice to provide the tenant with a copy of the receipt indicating the actual cost of the work.
- 45 Days- If a landlord plans to return a tenant’s security deposit in full, they have 45 days from the date the tenant vacated the unit to do so. There is no need to supply a tenant with written notice if the landlord is returning the security deposit in full.
If a court finds that a landlord does not follow the above procedures for returning a tenant’s security deposit, the landlord may have to pay the tenant double their security deposit, plus any applicable court costs and lawyer fees.
6. Transferring Security Deposits During Sale
If the property changes ownership, other than in a situation where the ownership is transferred to a party who has a lien on the property, the landlord is responsible for transferring all security deposits plus any accrued interest to the new owner.
The New Owner Must:
Within 21 days of receiving the security deposits, post a notice on the “primary entrance” of any tenant’s unit for whom they have received a security deposit, informing the tenant that they are now in possession of the tenant’s security deposit plus any accumulated interest.
What Is Illinois’ Security Deposit Law?
The security deposit law in the state of Illinois can be found in 735 ILCS 5/9-201 to 321 and 765 ILCS 705 to 715. Portions of these laws are commonly referred to as the Security Deposit Return Act (765 ILCS 710) and the Security Deposit Interest Act (765 ILCS 715).