Landlords in Illinois are not limited as to the amount of security deposit they request from their tenant. The typical amount requested in between one- and two-months rent and will depend on factors such as the creditworthiness or the tenants in the rental unit, and whether the unit is furnished.
If the premises is in a building of at least 25 units, the landlord must pay interest to the tenant on any deposit held by the landlord for more than six months.
In certain cases the landlord must pay interest on the security deposit. Specifically, if the premises is in a building of at least 25 units, the landlord must pay interest to the tenant on any deposit held by the landlord for more than six months (765 ILCS 715 et seq.). Furthermore, within 30 days after the end of each 12-month rental period the landlord must pay the tenant any interest due, either by cash or as a credit toward rent due. The requirement to pay the interest every 12-month period is waived if the tenant is in default of the rental agreement.
So, how does a landlord calculate the interest? The interest rate shall be equal to the interest paid by the largest commercial bank, as measured by total assets, having its main banking premises in Illinois on minimum deposit passbook savings accounts as of December 31 of the calendar year immediately preceding the inception of the rental agreement. As stated earlier, the interest must be calculated for any deposit held by the landlord for more than six months. If the landlord willfully fails or refuses to pay the interest required by law, and if a circuit court finds that the landlord has willfully failed or refused to pay, then the liability to the landlord is an amount equal to the amount of the security deposit, together with court costs and reasonable attorney’s fees. Bottom line, understand the procedure regarding security deposits and follow the law.
Return of Security Deposit
There are specific time frames that govern the return of the security deposit, along with a substantial penalty for non-compliance, so we will outline the procedure for the return of the security deposit in Illinois. All of the specifics can be found at 765 ILCS 710.
Prior to move-out the tenant should provide a forwarding address to the landlord. If the landlord is not making a claim against the security deposit then the deposit must be returned in full, along with any applicable interest, within 45 days after the tenant vacates the premises. If the landlord is making a claim against the security deposit, then within 30 days after the tenant vacates the landlord must give tenant an itemized statement of the damage allegedly caused to the premises and the estimated or actual cost for repairing or replacing each item on that statement. Paid receipts or copies of receipts must attached to the itemized statement, and the balance of the security deposit and any applicable interest must included.
Penalties for non-compliance with the proper procedure for returning a security deposit are steep. Per 765 ILCS 710, upon a finding by a circuit court that the landlord has refused to supply the itemized statement, or has supplied such statement in bad faith, and has failed or refused to return the amount of the security deposit due within the time limits provided, the landlord will be liable for an amount equal to twice the amount of the security deposit due, together with court costs and reasonable attorney’s fees.