State Specific Question About: ILLINOIS (IL)

Is that all the units that you own? My understanding for Illinois is that the requirement has little to do with owner-occupied and more to do with how MANY units you own total. If you have less than 25, then I believe you are exempt.

In any case, I believe what you want to provide them a reference to is "Illinois Compiled Statutes Chapter 765". Specifically, section 715/1 states:

"A lessor of residential real property, containing 25 or more units in either a single building or a complex of buildings located on contiguous parcels of real property, who receives a security deposit from a lessee to secure the payment of rent or compensation for damage to property shall pay interest to the lessee [...]"

I would just direct them to that and explain that the S/D Interest Act clearly applies to those with 25 or more units -- and you are not in that group.

- John...

Plus even if you did have to pay interest on the security deposit ... you don't have to pay more than you earn. I don't know of any bank paying 5% interest on a savings account. More like 1% interest.

Depends. Do you live in Chicago? Illinois law does not require you to pay interest - however Chicago has its own law.

5-12-080 Security Deposits

(a)A landlord shall hold all security deposits received by him in a federally insured interest-bearing account in a bank, savings and loan association or other financial institution located in the State of Illinois. A security deposit and interest due thereon shall continue to be the property of the tenant making such deposit, shall not be commingled with the assets of the landlord, and shall not be subject to the claims of any creditor of the landlord or of the landlord's successors in interest, including a foreclosing mortgagee or trustee in bankruptcy.

(b)Any landlord or landlord's agent who receives a security deposit from a tenant or prospective tenant shalt give said tenant or prospective tenant at the time of receiving such security deposit a receipt indicating the amount of such security deposit, the name of the person receiving it and, in the case of the agent, the name of the landlord for whom such security deposit is received, the date on which it is received, and a description of the dwelling unit. The receipt shall be signed by the person receiving the security deposit. Failure to comply with this subsection shall entitle the tenant to immediate return of security deposit

(c)A landlord who holds a security deposit or prepaid rent pursuant to this section for more than six months, after the effective date of this chapter shall pay interest to the tenant accruing from the beginning date of the rental term specified in the rental agreement at the rate determined in accordance with Section 5-12-081. (Amendment Effective June 1, 1997) The landlord shall, within 30 days after the end of each 12 month rental period, pay to the tenant any interest, by cash or credit to be applied to the rent due.

(d)The landlord shall, within 45 days after the date that the tenant vacates the dwelling unit or within 7 days after the date that the tenant provides notice of termination of the rental agreement pursuant to Section 5-12-110(g), return to the tenant the security deposit or any balance thereof and the required interest thereon; provided, however, that the landlord may deduct from such security deposit or interest due thereon for the following:

(1)Any unpaid rent which has not been validly withheld or deducted pursuant to state or federal law or local ordinance; and

(2)A reasonable amount necessary to repair any damage caused to the premises by the tenant or any person under the tenant's control or on premises with the tenant's consent, reasonable wear and tear excluded. In case of such damage, the landlord shall deliver or mail to the last known address of the tenant within 30 days an itemized statement of the damages allegedly caused to the premises and the estimated or actual cost for repairing or replacing each item on that statement, or actual copies of the paid receipts for the repair or replacement. If estimated cost is given, the landlord shall furnish the tenant with copies of paid receipts or a certification of actual costs of repairs of damage if the work was performed by the landlord's employees within 30 days from the ate the statement showing estimated cost was furnished to the tenant.

(e)In the event of a sale, lease, transfer or other direct or indirect disposition of residential real property, other than to the holder of a lien interest in such property, by a landlord who has received a security deposit or pre aid rent row a tenant, the successor landlord of such property shall be liable to that tenant for any security deposit, including statutory interest, or prepaid rent which the tenant as paid to the transferor.

The successor landlord shall, within 10 days from the date of such transfer, notify the tenant who made such security deposit by delivering or mailing to the tenant's last known address that such security deposit was transferred to the successor landlord and that the successor landlord is holding said security deposit. Such notice shall also contain the successor landlord's name, business address, and business telephone number of the successor landlord's agent, if any. The notice shall be in writing.

The transferor shall remain jointly and severally liable with the successor landlord to the tenant or such security deposit or prepaid rent, unless and until such transferor transfers said security deposit or prepaid rent to the successor landlord and provides notice, in writing, to the tenant of such transfer of said security deposit or prepaid rent, specifying the name, business address and business telephone number of the successor landlord or his agent within 10 days of transfer.

(f) If the landlord or landlord's agent fails to comply with any provision of Section 5-12-080 (a) - (e), the tenant shall be awarded damages in an amount equal to two times the security deposit plus interest at a rate determined in accordance with Section 5-12-081 (Amended February 7, 1997) This subsection does not preclude the tenant from recovering other damages to which he may be entitled under this chapter. (Prior code §193.1-8; Added. Council Journal of Proceedings, September 8, 1986, page 33771)

Indeed -- ignoring if you have to or not, the 5% number is insane. That was what it was like 20 years ago.

From a quick search, the interest rate for 2009 for Illinois (if you have to give it -- which I don't think you do) was 0.25% (and it is only .095% for 2010!). Or, even if you are in Chicago, the rate for 2009 was only 0.12% (0.073% for 2010).

Also, my understanding is that even if you are IN Chicago, it still wouldn't apply to you. In Chicago, owner occupied buildings with six or less units are not required to pay interest.

In fact, now that I say that, maybe that was what you were originally looking for (since you mentioned owner-occupied which has no bearing on the STATE law). If that is the case, then maybe print this out for them:

www.ihda.org/admin/Upload/Files/propertymgmt/AMforms/clrto.pdf

That summarizes things (in fact, I think you HAVE to give that to them anyhow!) -- and clearly states that OO units of 6 or less units are exempt.

- John...