Chicago’s Residential Landlord and Tenant Ordinance (RLTO) has protected the rights of landlords and their tenants since 1986. Proposed changes being considered by the city of Chicago would add unnecessary rules for landlords that would drive up housing costs.

Illinois REALTORS® statement:

“In its 40-year existence, the RLTO has historically reflected a balance between the rights and responsibilities of both landlords and tenants. This sweeping expansion of regulation abandons that balance entirely, driving up the cost of owning and operating housing in Chicago at the worst possible time.

“Each provision adds complexity, liability, and costs that ultimately fall on renters, without addressing the root causes of rising rents. At a time when Chicago desperately needs more housing supply, this ordinance increases the cost, risk, and legal exposure associated with providing rental housing.”

The potential changes will negatively impact real estate. The proposal intends to:

  • Create an Informal “Rent Control” Framework: At the time of lease renewal, if a rent increase is deemed “unconscionable” by a tenant, they would have the right to reject it and demand relocation payments equaling four months’ rent or more.
  • Cap Security Deposits & Ban Move-In Fees: Security deposits would be capped at one month’s rent and move-in fees are effectively prohibited. Many landlords began charging move-in fees to avoid Chicago’s highly punitive security deposit litigation environment. Many tenants see move-in fees as preferable to paying larger security deposit sums up-front.
    • It does contain minor changes to security deposit interest rates and comingling/depositing multiple security deposits into one account, items that have historically generated litigation, but those changes are overwhelmed by the broader expansion of landlord liability, mandatory payments, procedural mandates and tenant causes of action throughout the ordinance.
  • Establish a Sweeping Tenant Bill of Rights: Broad new tenant rights covering tenant organizing, rent withholding, lease termination, retaliation claims and quiet enjoyment while significantly expanding damages, penalties, attorneys’ fees and injunctive relief against housing providers. The ordinance also provides tenants with broader rights to make repairs to units at the expense of landlords.
  • Institute “Just Cause Eviction:”  Landlords must satisfy narrow statutory grounds before recovering possession and may owe relocation assistance even for owner move-in, family occupancy or major rehabilitation. The language also all but bars non-renewals and applies even to owner-occupied, two-six unit buildings.
  • Encourage “Cash-for-Keys” Negotiations: Rather than navigate the formal eviction process when trying to recover their property, Just Cause requirements create incentives for landlords to negotiate private buyout agreements with tenants. Similar policies in cities like San Francisco, where buyout agreements sometimes reached five figures, have made cash-for-keys arrangements commonplace, further driving up costs for housing providers.
  • Establish a Residential Rental Registry: Applies to all owners of one or more dwelling units available for rent in the City of Chicago. This registry will require landlords to submit multiple points of information to the Department of Housing, requiring significant additional disclosures, costs, and administrative time for landlords and management offices. Owners who do not reside in or have a place of business within the City of Chicago must designate or hire a local representative who does reside in or have a place of business within the City of Chicago to receive any notices from the city on the owner’s behalf. The fees to register properties are detailed below.
  • Registration Fees: There are fees associated with registering a given property or properties as follows
  • One to four units: $20 per unit annually
  • Five to 49 units: $40 per unit annually
  • Buildings of 50 or more units: $60 per unit annually
  • Create Significant Financial and Legal Exposure: Landlords may face four to five months of Fair Market Rent in mandatory relocation payments and penalties, plus attorneys’ fees and litigation costs. The fee and security deposit caps will also increase costs for landlords, which will have to be passed on to other tenants. The registration process and fees will place a heavy burden on the amount of time and money that comes directly from landlords’ bottom line and strict penalties for non-compliance are set forth in the ordinance. Limits on other fees will continue to raise the price of housing for tenants, and put the squeeze on landlords who will move out of neighborhoods.

Your Illinois REALTORS® GADs have been proactively educating Alders and engaging Chicago media outlets on this ordinance.

If you are in Chicago and have input as to how this ordinance would impact your business and operations, please reach out to Anne Emerson [email protected]