Security Deposits - Why They Are Disappearing in Chicago

If you live in Chicago and you have rented an apartment recently, you may have noticed the fact that more and more landlords are not requiring security deposits.  In fact, most large managed apartment buildings have done away with deposits altogether.  What is behind this trend?

Certainly, it could be that Chicago landlords recognize the dire economic times we all live in and are loosening their requirement out of a well-placed sense of rental brotherhood.  Do you buy that?  Didn't think so.   Then what is behind it?

The answer: LAWYERS.  Yes, that's right, for once, law firms are on the side of the little guy.  Chicago lawyers have identified the Chicago Residential Landlord Tenant Ordinance ("RLTO") as a perfect tool to go after the deep pockets of landlords recovering thousands of dollars for their clients while pocketing a little for themselves in the process.  RLTO places significant burdens on Chicago landlords when it comes to security deposits.  Among the requirements are that the landlord give a proper receipt for any security deposit that it accepts, that the deposit not be co-mingled with the landlord's money, and that the deposit be returned or properly accounted for upon lease termination.  As easy as it seems, landlords are having difficulty following RLTO and the Court in Chicago have been unforgiving in their strict enforcement.  The result is that many landlords have been faced with large judgements and class action claims that threaten their bottom line.  

In response, many landlords have chose to drop the requirement that tenants post a security deposit altogether.  This is a windfall for Chicago tenants.  No longer will tenants be required to come up with an extra month or sometimes two months for a security deposit freeing up substantial amounts for other needs.  Deposits are often replaced with nonrefundable "move in" or "processing fees" which may or may not be returned to the tenant or credited against the rent due.  These fees average about $250, but can vary widely.