The RLTO imposes some of the strictest security deposit rules in the country. Landlords must hold deposits in federally insured interest-bearing accounts, provide written receipts, pay annual interest, and return the deposit with an itemized statement within 30 days of move-out. Violations can result in penalties of up to twice the deposit amount.
Under the RLTO, landlords must deposit security deposits in a federally insured interest-bearing account within the city of Chicago. The landlord must provide the tenant with a written receipt including the name and address of the financial institution, the amount of the deposit, and the account number. The landlord must also provide the tenant with a copy of the RLTO summary at the time the deposit is collected.
Chicago landlords are required to pay interest on security deposits annually. The interest rate is set each year by the City Comptroller. The landlord must either pay the interest directly to the tenant or credit it against rent within 30 days after the end of each 12-month rental period. Failure to pay the required interest is a violation of the RLTO and can entitle the tenant to significant penalties.
When a tenant moves out, the landlord has 30 days to return the security deposit along with all accrued interest, or to provide an itemized statement of deductions. Allowable deductions include unpaid rent and repair of damages beyond normal wear and tear. Normal wear and tear cannot be deducted. If the landlord fails to provide the itemized statement and return the balance within 30 days, the tenant may be entitled to the return of the entire deposit plus penalties.
The RLTO provides strong remedies for security deposit violations. If the landlord fails to comply with the deposit requirements — such as not holding the deposit in a proper account, not providing a receipt, not paying interest, or not returning the deposit within 30 days — the tenant may recover up to two times the deposit amount, plus the deposit itself, plus interest, plus attorney fees. These penalties make it critical for tenants to know and enforce their rights.
3 questions answered
Yes. Landlords holding a deposit for 6+ months must pay interest on it annually using the rate set by the City of Chicago. They must also provide a receipt and keep the deposit in a federally insured interest-bearing account.
30 days after you move out (or 30 days after they discover damage, if later). They must send an itemized statement of deductions. Failure to comply may entitle you to 2x the deposit amount plus attorney's fees.
If your landlord fails to hold the deposit properly, pay interest, or return it on time, you may be entitled to the entire deposit plus up to twice the deposit amount as a penalty, plus attorney's fees.
This guide is for informational purposes only and is not legal advice. For advice specific to your situation, contact a qualified attorney or one of the free legal services listed above.