Illinois Security Deposit Collections & Holdings

Illinois Security Deposit Collections & Holdings

Last Updated: January 2, 2023 by Ashley Porter

Quick Facts Answer
Maximum / Limit No limit (except for mobile homes)
Receipt Requirement None
Inventory Requirement None
Interest Requirement Sometimes required

To learn about laws on security deposit returns in Illinois, click here.

Maximum Security Deposit Allowed in Illinois

There is no limit on the maximum security deposit by Illinois state law, except in mobile home parks, where the security deposit is limited to one month’s rent.

However, some local governments have established their own rules regarding security deposits, including:

In suburban Cook County (notwithin Chicago city limits), the maximum security deposit is limited to one and one-half month’s rent with some exceptions, including:

  • Owner-occupied properties with six or fewer units
  • Some single-family homes and condominiums
  • Shareholders living in cooperatives
note

Cook County Code of Ordinances only applies to unincorporated areas of the county and Chicago is governed by Chicago Municipal Code. At the time of the adoption of the Residential Tenant Landlord Ordinance in 2021, the county estimated that it would apply to more than 245,000 suburban renter households.

Check your local laws to determine if there are any rules regarding security deposits.

Can Landlords Charge an Additional Pet Deposit in Illinois?

Yes, landlords can charge an additional pet deposit in Illinois, except for service dogs and emotional support animals.

However, in suburban Cook County, the total security deposit, including a pet deposit, cannot exceed one and a half of one month’s rent. and in mobile home parks across the state, the maximum is one month’s rent.

How Much Rent Can a Landlord Collect Upfront in Illinois?

There is no limit on the amount of rent that can be collected upfront in Illinois. Many states have a limit on the amount of rent that can be collected at once, but Illinois does not.

Security Deposit Collections in Illinois

While other states have additional requirements for landlords that collect a security deposit, such as providing certain documentation of the condition of the unit at move-in, Illinois does not.

Do Landlords Have to Provide a Receipt for the Security Deposit in Illinois?

Landlords are not required to provide a receipt for the security deposit by Illinois state law. However, in some jurisdictions, like Chicago and suburban Cook County, landlords must provide a receipt for any security deposit collected.

The receipt must include the:

  • Amount of the deposit
  • Name of the person receiving the deposit
  • Name of the landlord
  • Date it was received
  • Description of the dwelling unit
  • Signature of the person receiving the deposit

In Chicago and suburban Cook County, landlords are also required to either disclose information about where the security deposit is held in the lease agreement or provide written notice to the tenant within 14 days if there is no written lease agreement.

What Obligations Do Landlords Have to Establish the Condition at Move-in in Illinois?

Illinois law does not require landlords to document or establish the property’s condition at move-in. While other states legally require a written inventory of damages to be completed when collecting a security deposit, Illinois does not.

However, your local law may require an initial inspection or other pre-tenancy obligations, like in Mount Prospect, where landlords are required to conduct a walk-through inspection if requested by the tenant.

Security Deposit Holdings in Illinois

Illinois law does not require landlords to hold security deposits separate from other funds. However, in Chicago and suburban Cook County landlords are required to keep the security deposits separate from their own assets in a federally insured interest-bearing account in a financial institution located in the State of Illinois.

Are Tenants Entitled to Interest on Their Security Deposit in Illinois?

Illinois law does require landlords to provide interest on held security deposits, but only in some situations, and some cities, like Chicago, have different rules regarding interest on security deposits. The current interest rate in both Illinois and Chicago is 0.01%.

By Illinois state law, landlords must pay interest on security deposits if they own 25 or more units (either in one building or in a complex of buildings) and the security deposit is held for six months or more.

In Chicago, tenants are entitled to interest if their security deposit is held for longer than six months. In this case, the landlord owes interest from the first day of the lease term. Dwelling units in owner-occupied premises containing six or fewer units are exempt from this rule.

When a tenant is entitled to interest on their security deposit, it must be either credited towards rent or paid to the tenant directly within 30 days after the end of each 12-month rental period if the accrued interest is $5 or more. However, the $5 limit does not apply in Chicago, so interest must always be paid to eligible tenants on an annual basis.

How Are Security Deposits Accounted for in Illinois?

Security deposits are not considered taxable income when they are collected.

What Happens to a Security Deposit When the Property is Sold in Illinois?

When a property is sold in Illinois, the original holder of the security deposit will remain jointly and severally liable until it is transferred. The new owner must handle it according to the same rules.

Upon receiving the security deposit and the name and address of the tenant, the new owner has 21 days  (14 days in Chicago and Cook County) to post a written notice. It must be posted on the main entrance of each unit stating that the new owner has received the security deposits.

In Chicago and suburban Cook County, the new landlord has 14 days after the sale to notify the tenant of their receipt of the security deposit in writing by mail or hand delivery to the tenant. Additionally, the original holder of the security deposit has 10 days to send written notice to the tenant including the successor landlord or his agent:

  • Name
  • Business address
  • Business telephone number

Sources