Landlords should have a firm grasp on Illinois security deposit law to avoid disputes over deductions or missed return deadlines that often arise during tenancies.
This guide outlines everything landlords need to know about these regulations, including the maximum amounts they can collect, how to store deposits, whether they must pay interest, legal grounds for deductions, guidelines for returning deposits, handling disputes, and more.
Statutes Regulating Illinois Security Deposits
Illinois’s security deposit laws are outlined in 765 ILCS 710, known as the Security Deposit Return Act, and outline how landlords can manage, return, and deduct from residential deposits.
Maximum Security Deposit Amounts Under Illinois Law
Illinois law sets no statewide limit on the amount a landlord may collect for a security deposit. Landlords can collect any reasonable amount they see fit, and this flexibility stays the same regardless of lease type, contract length, or any other factors.
Illinois provides no exceptions to deposit maximums. Chicago enforces its own rules through the Chicago Residential Landlord and Tenant Ordinance, although the ordinance does not set a specific cap on security deposit amounts either.
Security Deposit Storage Regulations
Illinois state law does not enforce statewide regulations for how most landlords store security deposits. Outside Chicago and Evanston, the law sets no requirements for account type, receipts, or disclosures, so landlords can choose any reasonable method that supports precise recordkeeping, especially when subletting arrangements add extra layers of communication.
As for Chicago and Evanston, local ordinances impose stricter rules, requiring landlords to hold security deposits in separate, interest-bearing accounts, provide written disclosures about where the funds are kept, and pay or credit interest to the tenant, with penalties for noncompliance.
Security Deposit Interest in Illinois
Illinois landlords who own or manage residential buildings with 25 or more units must pay interest on any security deposit held for more than six months under the Illinois Security Deposit Interest Act. The required interest rate is the annual rate published by the Illinois Department of Financial and Professional Regulation.
Landlords must pay or credit this interest within 30 days after each 12-month period the deposit is held and again within 30 days after the tenancy ends, helping maintain clear financial expectations throughout the tenancy.
Making Security Deposit Deductions
Security deposit deductions help landlords protect the long-term condition of a rental property. Because tenants sometimes miss rent or cause damage beyond normal wear and tear, landlords rely on deposit funds to cover repairs to return the unit to its original condition.
When Landlords Can Deduct
Illinois landlords may draw from a tenant’s security deposit for these reasons:
- Repairs for damage beyond normal wear and tear that change the unit’s condition
- Costs to fix fixtures or appliances that the tenant damaged during the lease
- Cleaning charges when a tenant leaves the unit excessively dirty
- Unpaid rent or charges owed under the written lease agreement
- Replacement of the property that the tenant removed or permanently damaged
When Landlords Can’t Deduct
Illinois landlords may not draw from a tenant’s security deposit for these reasons:
- Minor cosmetic issues that fall within reasonable and expected wear
- Routine cleaning that fits a standard turnover between tenants
- Property upgrades or improvements unrelated to tenant-caused damage
- Costs created by the landlord’s failure to maintain essential systems
- Damage linked to factors outside the tenant’s control, including building issues
Necessary Documentation to Accompany Deductions
Illinois landlords who own or manage buildings with five or more units must give tenants an itemized statement of damages within 30 days and follow up with paid receipts or estimates within 30 days after that.
Landlords with smaller buildings have no statewide requirement to provide documentation, although detailed records support more transparent communication during subletting.
What to Do When Deductions are Greater Than the Deposit
Tenants sometimes cause damage that exceeds the security deposit, and landlords have every right to recover the additional costs. Illinois landlords should first seek payment directly from the former tenant and explore other options if they are not successful in collecting the balance. State law requires landlords in buildings with five or more units to send an itemized damage list within 30 days, thereby strengthening any subsequent collection efforts.
Landlords who are unable to collect the remaining balance may file a claim in their corresponding Illinois small claims court.
Returning Security Deposits to Tenants
Illinois law outlines clear rules for returning any remaining portion of a tenant’s security deposit after eligible deductions, which helps landlords maintain smoother move outs.
Required Timeline for Return
Illinois landlords with buildings of 5 or more units must return the full security deposit or any remaining balance within 45 days after the tenant moves out. If the landlord plans to deduct for damage, the landlord must send an itemized statement within 30 days and follow up with paid receipts or estimates within 30 days after that.
Method for Return
Illinois law does not require a specific method for returning a security deposit, so landlords may use check, cash, electronic transfer, or any other method they see fit. When deductions apply, landlords in buildings with five or more units must include an itemized list of damages and later provide receipts or estimates to meet state requirements.
Penalties for Late Return
Illinois landlords who miss these deadlines or fail to follow the required steps face significant penalties. Landlords in buildings with five or more units who do not send the itemized statement within 30 days lose the right to withhold any part of the deposit. Further, if they do not provide receipts or estimates within 30 more days, they may owe the tenant the deposit plus twice the amount illegally withheld.
Security Deposit Disputes
Tenants who disagree with how a landlord handles their security deposit have every right to raise a dispute. To start, they should request clarification in writing, review the itemized deductions, and cite Illinois law throughout their negotiations. If they cannot resolve the issue, they may pursue mediation or take the matter to court.
Landlords can prepare for security deposit disputes by using move-in and move-out checklist tools, staying on top of accounting and bookkeeping, and including non-negotiable terms within the lease agreement. Strong documentation, current knowledge of Illinois laws, and compliance with all required timelines will help landlords manage these disputes confidently.
Using Condition Reports to Document Damage
Security deposits in Illinois work more smoothly when landlords rely on clear move-in and move-out condition reports. These digital tools will help landlords document a unit’s condition, track any changes, and outline damage with little to no uncertainty. These reports ease communication and support fair decisions during turnover.
Landlords can simplify this process by using property management software to generate digital reports with detailed photos and videos, all from a smartphone. Strong documentation before move-in and after move-out makes security deposit deductions easier, as clear evidence will stand behind each deduction.
Sign up for a free TurboTenant account to build organized digital condition reports that fortify every step of the deposit process.
FAQs: Illinois Security Deposit Law
Can a landlord deduct painting from a security deposit in Illinois?
A landlord in Illinois may deduct painting costs only when a tenant leaves damage that goes beyond normal wear and tear. Routine repainting that results from regular occupancy does not qualify for a deduction from the security deposit.
Are nail holes considered normal wear and tear in Illinois?
Small nail holes usually count as normal wear and tear in Illinois, so landlords cannot deduct for basic picture hanging. Larger holes, excessive marks, or wall damage that requires more than simple touch-ups may justify a deduction.
Does the landlord or tenant have to pay for carpet cleaning in Illinois?
Illinois law does not require tenants to pay for standard carpet cleaning. A landlord may deduct cleaning costs only when a tenant leaves heavy stains, odors, or damage that goes beyond the typical wear expected from everyday living.
What happens if a landlord doesn’t return a security deposit within 45 days in Illinois?
When a landlord in Illinois does not return the security deposit within 45 days in buildings with five or more units, they lose the right to withhold any portion of it. They may also owe the tenant the deposit plus 2 times the amount withheld.
