A Chicago Landlord's Guide to Security Deposits

A Chicago Landlord's Guide to Security Deposits

There are an average of over 20,000 eviction filings in Chicago each year.

If you're a landlord, you never want to get to the point where you have to evict a tenant. One of the ways you can protect yourself is to screen your tenants thoroughly. Another way is to ask for security deposits when your tenants move in.

The most common reasons for tenant evictions are missed rent payments and property damage. Security deposits give you an easy method for combatting the losses involved in these scenarios. Keep reading and we'll give you a quick guide to security deposits for your Chicago rental property.

What Are Security Deposits?

A security deposit is a form of insurance and property protection that landlords can use to shield themselves against delinquent tenants financially. If you have a tenant that damages your rental beyond what could be considered wear and tear, or they miss a rental payment, security deposits cover those costs.

Collecting security deposits is commonplace across all 50 states, but each handles them slightly differently. Therefore, it's essential to follow Illinois laws when collecting a deposit from your new tenants.

Security Deposit Laws

The most important aspect of security deposit law concerns how much you can collect for security. In Illinois, unlike some other states, there is no maximum deposit.

Before you jump at the chance to obtain a security deposit that covers all potential issues, remember that this is a major expense for tenants. If you ask for too much, you run the risk of deterring qualified tenants from applying for your rental unit.

Most landlords will charge the equivalent of half of a month or a full month of rent. This is a standard amount that won't come as a surprise to any of your applicants.

Withholding or Returning a Security Deposit

Other security deposit laws are centered around withholding and returning the security deposit. When it comes to returning the deposit, you must do so within 30 days after the tenant moves out of your property. Failing to do so can result in a charge of up to twice the security deposit amount.

You can withhold a security deposit for unpaid rent, but most commonly, you'll withhold some or all of it due to property damage. When a tenant moves into your rental, you or a property manager should always conduct a move-in inspection with them.

This involves taking an inspection checklist and walking through the unit to make note of any existing property damage. When the tenant moves out, you'll do the inspection again. If you find new damage that exceeds normal wear and tear, you can take the cost of repairs out of the damage deposit.

Your tenant may try to dispute the charges. For that reason, it's important to document the damages and keep receipts for the repairs.

Getting Help with Preventing Rental Issues

Security deposits are a great way to deter poor behavior from tenants. If you're feeling overwhelmed by the prospect of managing your tenants, a Chicago property manager can help.

PMI Windy City is Chicago's top property management team. We offer comprehensive property management services, from tenant screening to eviction assistance. Contact us today to learn more about what we do and how we can help.