Chicago Landlords: Think Twice About Taking That Security Deposit

Chicago Landlords: Think Twice About Taking That Security Deposit

A couple of weeks ago I posted on the Chicago Landlord-Tenant Rules and mentioned, among other problems, that the rules pertaining to the acceptance, management, and disbursement of security deposits were quite onerous and fraught with potential problems for real estate investors. Well, on Friday the Chicago Tribune published an article on this very issue headlined Realtors Pull Recommendation For Security Deposits. The gist of the article is that the pitfalls of managing security deposits are so great now that the Chicago Association of Realtors for the first time is recommending that landlords NOT take security deposits.

The article goes on to quote Brian Bernardoni, senior director of government and public policy at the Chicago Association of Realtors as saying: "(The ordinance) is impossible to comply with, and it puts our members at risk." Wow! That's a pretty strong statement. Impossible to comply with. From what I know of the requirements I would agree. And as I pointed out a couple of weeks ago failure to comply leaves a landlord exposed to a penalty of twice the security deposit + court costs + attorney fees. Oh...and don't you know that with all this publicity on the issue tenants are now more likely to take their landlords to court if they cross the line in the slightest - litigation lottery.

The article goes on to say:

The association realizes its advice puts landlords at a financial disadvantage if tenants damage a unit. But those risks, its leaders believe, pale in comparison to the potentially expensive award that could result from a lawsuit.

So what is a landlord to do? As I mentioned in my original post you can charge a higher rent and/ or charge move in and move out fees and/ or have them pay the first and fifth month's rent in advance. And pray that you know how to screen a tenant.

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    Gary Lucido

    After 20 years in the corporate world and running an Internet company, Gary started Lucid Realty with his partner, Sari. The company provides full service, while discounting commissions for sellers and giving buyers rebates.

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