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Added Apr 19 2018

If I am leaving a place, when can I get my security deposit back? I'd like to use my security deposit from my old place (the one i'm in now) and put it towards the security deposit on the new place because I don't have a lot of spare funds sitting around. Is it possible to get the security deposit back before the move out date on the old place in order to make this happen?

  • Gil Jimenez Private Investigator; IL concealed carry trainer

    Katie has it mostly right. "Landlord has 30 days to notify outgoing tenant if any funds will be withheld, and 45 days to actually return the deposit" and present a receipt for the repairs (the deducted cost of which had better be reasonable).

    Mag has it wrong. The landlord does NOT have to show anyone his bank statement. All he has to do is pay tenant yearly interest on the security deposit at the interest rate specified by the city.

  • Every time you legally pursue a landlord for ten cents of annual interest you are participating in raising rents. You don't know how many small building owners I have known over the years that were nice and reasonable people, charging reasonable amounts, then they get nailed by a tenant. Sure it's the law but is it really fair? Several owners I know went from charging $800-$900 for a two bedroom to $1500 overnight because they didn't comply with the 10 cent of law in Chicago.

    Some of these tenants rights companies have certainly helped some individuals profit from the CRTLO but it often twists the elbows of decent Landlords/owners to raise their rents dramatically to make up for the loss and to shore up against future onslaughts. Court costs. Attorney fees. Time not working but sitting at the Courthouse and paperwork.

    So I suggest you reserve legal action against landlords who are inattentive and severely breach your tenant rights. It's against the law to go over 30 mph in the park yet every driver reading this has done it. It is against the law for bike riders to blow through stop signs and red lights. Should you get a ticket every time?

    Even though the city doesn't even bother to specify it the interest rate is "simple interest".

    For a $1000 security deposit, at the 2018 rate set by the City Comptroller of 0.01%, you talking about $0.10 annual interest.

    The simple formula: (Security Deposit) x (days in rental period divided by days in rental term) x (interest rate):

    $1000 x (365/365) x .0001 = $0.10

    Wow. What a big deal.

    Also, if you have ever paid on the 6th, you are officially late and the landlord BY LAW is entitled to a late fee. $10 on the first $500 and 5% on the remainder. So for a $1000 rent paid (oopsy) even one day late and you are breaking the CRTLO and by law can be assessed a $35 late fee. It can be taken out of your security deposit later.

    Drop a dime.

  • Thanks Humboldt, I don't get how a question about asking his LL for a favor turned into suing him. Treating people decently tends to go a long way, especially when you end up needing a favor.

  • Gil Jimenez Private Investigator; IL concealed carry trainer

    Hum is spot on. The CRLTO is NOT landlord friendly and the strict construction security deposit section is a landlord's worst nightmare.

    Yes, the sec dep rules were drafted to protect tenants from rampant deposit abuse by scumlords who were basically stealing the deposits.

    But the rules go too far in the opposite direction. ANY landlord violation of the sec dep rule subjects him/her to a penalty of 2 TIMES the deposit plus return of the deposit. The WORST part is that the ordinance does not give a judge any discretion.

    There are NO "minor" violations of the CRLTO sec dep rules.

    This can be crushing to the owners of a non-owner occupied mom & pop 2 or 3 flat.

    In the more upscale parts of Logan Square, figure at least $9,000 in property taxes (and always rising). So $750 of each month's rent goes to property taxes.

    Add in the other costs of ownership - insurance, repairs, vacancies, water (OMG!). maybe a rental agent (rip off fee = 1 mo. rent/unit), mortgage.

    Mom & pop were only going to gross $36,000/year to begin with.

    So, as Hum points out, suing (i mean, screwing) the landlord for $thounds over a relatively small sec dep error - just because you can - is unconscionable.

    And it guarantees that mom & pop will have to raise the rent on the next tenant to make up for it.

    To avoid the CRLTO sec dep mine field an alternative many landlords are using is a ridiculously puny move in fee. But the sec dep is meant to cover damage caused by a tenant. I once had a group of roommate tenants who caused $2,400 in damage that properly came out of their sec. dep.

    Why even bother collecting a move in fee of, say, $300.

    Yes, tenants deserve sec dep protection - BUT THE CURE IS TO GIVE JUDGES DISCRETION TO SET THE PENALTIES DEPENDING ON THE CIRCUMSTANCES.

    So unless your landlord is a complete, total, and utter slumlord - don't screw him/her over 10 cents, or a deadline missed by a couple of days.

    And no - I cannot return a sec dep early. Sorry.

  • You can't count on it for your next security deposit, the turn around is too long. And a prudent landlord won't give it to you until after your move out date when they've had a chance to examine the apartment.

    Your best bet is to hold onto it when you get it back, and use it for the security deposit the next time you move.

  • I don't think the interest thing applies to non-CRLTO properties, correct?

  • The Chicago ordinance, which governs security deposit rules (and lots of other things too) applies to all apartments EXCEPT units in owner occupied buildings with six or fewer units.

    JD, you can ask your landlord if they will return your deposit early, but I wouldn't count on it.

    We refund our tenants the day they move out, but there is literally no way I would return any portion of it, even to a tenant I liked, before they move out.

  • future alderman future alderman

    been a long time since i had to deal with any of this mess, BUT, in general, I would say if you're a long-time renter who has been a great tenant just ask if you can use your deposit as last months rent, and offer to do a walk-thru in advance so if there are problems they can be addressed. that will show u who you're actually dealing with; if a momandpop LL is really responsible and they know you have been they might give you half before move-out.
    ps-i believe the interest rate has been decided and also i am VERY glad to hear that unreasonable move-in rates are being treated as security deposits in chicago. I know many landlords ask each individual tenant for hundreds more than what is half their share of the rent, and many have a cleaning fee on topof that.

  • I am apartment searching now, and was apartment searching a year ago. It seems the move-in fees have gone down a lot. Last year it wasn't unusual to hear landlords asking for half of a month's rent. Now it's usually $200-$300.

  • Lisa Hibbard Avondale/Logan Square Resident

    Maybe you can deep clean the apartment when you move and do a walk through with the landlord so that they can see if there is any damage from the move. Ask the landlord to agree that if the apartment is in good condition, then you can receive the security deposit right away. If any interest is as miniscule as everyone said above, offer to waive it as a condition to having your deposit back right away.

  • MKW in Lincoln Square 25 years in the Square

    JD could you ask the LL at new place if you can do half the security deposit up front then pay the other half over the next few months after move in? I've let tenants do that in the past, it's certainly worth asking.

    However, what Humboldt writer and Gil said about security deposits are correct - I stopped requiring security deposits and instead charge a move in fee due to the onerous CRLTO laws surrounding maintenance and return of security deposits. I've been fairly lucky so far, but have had a couple tenants do some damage (pulled up carpeting, holes in walls, broken doors) that far surpassed their move in fee. I had to absorb these costs, but it's better than running the risk of a tenant suing me for 2x damages and their attorney fees - all of which can be upwards of $10-15K. So, I can see where the CRLTO's rules around security deposits can in a roundabout way cause rents to rise.

  • MKW, there is nothing "roundabout" about it. Suing landlords for 10 cent security deposit interest has raised countless rents throughout the city.

    After getting screwed once or twice by a tenant for an honest mistake of failing to return 10 cents of annual interest earned on the security deposit cost changed perspective forever. Even when the loss is less than the 2x damages and court/attorney fees. What the Housing Advocate Non-profits (funded by your property tax dollars) do most of the time rather than litigate is to write a threatening letter that they are going to sue you, but a "settlement" for a lower amount is negotiated.

    Most landlords choose the negotiation and pay because it beats all of that time lost in court, as well as the potential attorney fees.

    The landlords who got screwed responded in different ways. One had to take on the expense of hiring an accountant to make sure that they ten cent checks were sent out every year. Keep in mind it costs 50 cents for just the postage now. That cost was passed on to tenants in the form of modest but unnaturally accelerated annual rent increases. Another one raised rent by over $100/month (and got it immediately) to make up for the $1000 he lost on that specific unit, and raised most of the other 17 units by 5%+ to go to a legal fund that his Financial Advisor recommended as a DIRECT RESPONSE to what happened with the tenant. Some of those units hadn't had their rent raised in over 5 years, but the actions of ONE TENANT affected 15-20 other people who then had to shoulder the burden of higher rents to make up for this one person who grabbed $1000 or $2000 based on a technicality.

    Raising rents isn't always because a landlord is greedy. It is like putting on a hat because a bird just crapped on them. Just another tool to fix a problem.

    But please go after sleazy slumlords with all of your might! There are some out there. Save your wrath, fury, and most litigious machinations for them who deserve it.

  • future alderman future alderman

    you sound very bitter,humboldtw---llords will defend their rights to the death and blow off tenants as long as humanly possible for issues ranging from plumbing-insects-heat but god forbid a tenant wants their deposit in an interest-bearing account which is spelled out AS PLAIN AS DAY in the ll/tenant ordinance. it is law-breaking landlords that raise costs in that regard.

  • Gil Jimenez Private Investigator; IL concealed carry trainer

    fut

    using kind of a broad brush to demonize all landlords, don't ya think?

    "llords will defend their rights to the death and blow off tenants as long as humanly possible"

  • "future alderman":

    The benefit to a tenant seeing their security deposit in an interest bearing account is near zero. on a $1000 security deposit, that's 10 cents in a year.

    It's not law-breaking that landlords have to charge enough to cushion themselves from frivolous lawsuits (costing them thousands of dollars over as little as literally a few cents) - that sort of cost is built into every item you buy at the store, etc.

    The risk and punishment to landlords of not paying tenants their 10 cents per 1,000 dollars per year is completely disproportional to the "benefit" to the tenant.

    I'd gladly give you a dime, or a few dimes, for you to rethink how much you demonize landlords (presumably because you've had a bad experience with one, which I have too and can totally understand) and actually give some consideration to the points made here.

  • I would find a new apartment that doesn’t require a security deposit. Like people mentioned, move in fees are way cheaper and if you can afford a move in fee, you’ll be fine.

    If you have your heart set on a place that requires a security deposit, look into taking out a payday loan or other loan with reasonable interest. Just pay it off right away when you get the deposit back. You may end up paying a little more due to interest, but when you’re in a bind you gotta do what you gotta do.

  • Do renters really prefer move in fees to SD's?? I would much rather get my money back.

    As for payday loan, that sounds like a not ideal route.

  • Gil Jimenez Private Investigator; IL concealed carry trainer

    For a short term loan that you will pay back w/i 30 days when you get your sec dep back the Pay Day loan seems a reasonable alternative.

    But pay it back right away and make sure you'll have enough to cover the principal AND interest!

    I mean, what other choice to you have?

  • Taking OP out of equation and speaking in genarl.

    What to do? Avoid putting yourself in a position like needing to go that route. I know its easier said than done, but not living paycheck to paycheck is important. I did so for my first few years in Chicago and luckily didnt get bit. If income can't be increased then lower expenses. Hold off on moving till you can afford to cover both security deposits. Pack your lunch. Cut the cord, even internet if you have to.

    Find the joy in slumming it a little. I know I did. Network TV is actually pretty good when its your only choice. Read a book, even join a book club.

    I know lots of smart people who carry credit balances. Card rates are crazy enough, I am sure these payday places are extremely predatory. High interest loans are traps and even smart people making plenty can have trouble getting out of them.

  • Sorry Future Alderman, but I have to side with Humbolt Writer on this one. We are a small family owned rental company with a five star Yelp rating. The majority of our tenants tell us we are the best LLs they have ever had. 15 years ago I rented to a man who immediately started complaining about noise from the stairwell and the tenants above. We were surprised because the issue had not come up with prior tenants, but posted notices in the halls to not run up and down the stairs and we talked to the people above him. His complaints were relentless so we offered to tear up his lease as long as he moved within the next 30 days. He demanded that we also pay for all of his moving costs including utility changes, which we refused to do. He then hired a lawyer to sue us for a defective apartment. When his lawyer said he could not do that he ordered his lawyer to nail us anyway he could. I had given the tenant the required receipt for his security deposit but could not prove I actually handed it to him, even though I The tenant denied getting his copy. That cost us $1700 plus legal fees.

    We continued to hold security deposits for many years because they gave us protection against bad tenants and we felt they were more fair to good tenants, but as legal decisions in Chicago skewed more and more toward tenants and the legal fees to lawyers who specialize in nailing LLs got bigger we refunded all deposits and will not adopt them again unless the laws become more equitable. We would still prefer deposits but can't afford the financial risk .

    Just like we all pay for the cost of shoplifters, all tenants pay the price of bad tenants and that had gotten worse as LLS shifted to move-in fees.

    As an aside we learned to never refund deposits before someone moved out, nor let them live out their deposits. We were burned multiple times, always by long term tenants whom we had no prior problems with.

  • future alderman future alderman

    another time humboldt has waylaid the original discussion. i won't tell you how many reasonably priced apartments i've been sold out from and/or condoized out of. Those landlords that did not have security deposits in separate accounts were a headache for EVERYONE involved. and katie, i can't remember a lease i've EVER signed that didn't have the security deposit written at either the very top or bottom of it, and i'm going back DECADES-that is standard and for both parties protection

  • Future Alderman - under current law even if the security deposit is written on the lease (as ours were) and the tenant paid the deposit with a check, the landlord still has to provide a written receipt at the time the deposit is collected and the penalty can be as much as 2 months' rent.

  • Out of the goodness of my heart ( & 1st time LL) I mistakenly allowed my 1st tenant to use the security deposit to pay her (supposedly ) last mths rent in an effort to help her out. What happened is she didn't leave at the end of her lease, didn't pay rent & stayed 2 mths past her exit date. Cost me $$ processing an eviction notice. An absolute nightmare~Not only that she ran the tubwater all night & broke her keys off in the apt door & front door to the building when she FINALLY left~ Wanted to take her to court to collect but decided I really didn't want that raving B in my life. Was afraid she'd throw a brick thru my windows! It's difficult when you're a LL with a heart, but business is business

  • And all this in the thread is why I turned my 'rental' into an Airbnb....the last tenants 'put me completely over the top' and with increased taxes, utilities, etc...I'm a better 'host' than a 'landlord'.... You can 'research' and check credit and references forever, and the new renters can turn into nightmares in 24 hrs. And you never know.....

  • Gil Jimenez Private Investigator; IL concealed carry trainer

    Newbie - you got it right.

    Business is business.

  • There really is a lot of confusion about CRLTO.

    It is impossible for a small time landlord who doesn't live in the building to comply with the security deposit aspect of CRLTO as individuals because the law stipulates that the SD "shall not be commingled with the assets of the landlord."

    So, anyone saying it has to JUST be in a separate account is ignorant of the law.

    If you go to a bank and try to open an account you will be required to provide your social security #. As soon as you open that account and deposit a SD check you have officially broken the law. Yes, gulp, all of you who have done this are at risk. Even though you have a separate bank account you have just commingled funds.

    No, small-time owners have to form an LLC or Corporation, pay the one-time attorney set-up fee ($500-$1000), pay the state annual report filing fee ($150-$300), pay the accountant to fill out annual Federal and state tax returns ($150-$300), etc., etc. Once you create another entity you can open a bank account using the FEIN, often paying a monthly account fee. That is the only legal way I know of to comply with the CRLTO & avoid commingling assets.

    Anyone who says that rents haven't risen as a result of CRLTO hasn't encountered the facts or faced them. A small-time landlord that gets hit with a $2500 payout to a renter because they failed to refund 10 or 15 cents in annual SD interest is unfairly & adversely affected. To comply is expensive for the landlord as illustrated above. Faced with paying to incorporate to comply with CRLTO thereby commits to not insignificant & permanent increased annual costs. This often elicits difficult decisions. To make up for non-compliance losses is expensive, at first for the owners and then for the tenants.

    Survey says: RAISE RENTS and charge move-in fees, RAISE RENTS & incorporate & collect SD, or RAISE RENTS in order to get ready to sell the building to a corporation who spreads these costs across a much larger array of units.

  • future alderman, I'm sorry that you have had countless apartment buildings sold out from underneath you during the past decades. That is exactly the reason why so many of us have saved and sacrificed to buy Real Estate. Before that we were subject to price increases, non-renewals, etc. and had to move out of neighborhoods where we were happy and comfortable. Is there some reason that you haven't purchased a home? That's the best way to avoid some landlord ripping you off for 10 cents over the span of one year. Heinous lawbreakers they are. Goodness gracious sakes alive.

    Also, I am curious why my explanation about a proper bank account for security deposits earned a thumbs down from you? There is nothing wrong with teaching landlords how to protect themselves by complying with every inane aspect of CRLTO. The fact is that landlords who deposit security deposits into a bank account in their personal name, or in any account opened using their social security number, could land the landlord being lorded over by a tenant's rights lawyer (provided for free to victims of dime crime funded by what, OWNER'S REAL ESTATE TAXES) threatening, demanding and often causing a seemingly unjust transfer of thousands of dollars from landlord to tenant.

    Simple economics: higher cost of commodity (rental housing) equals higher costs to users of that commodity (tenants). 10 cent rule in Chicago dictated by CRLTO = higher costs to tenants. This ain't Einstein stuff.

  • @humboldtwriter:

    "If you go to a bank and try to open an account you will be required to provide your social security #. As soon as you open that account and deposit a SD check you have officially broken the law. Yes, gulp, all of you who have done this are at risk. Even though you have a separate bank account you have just commingled funds."

    I did not believe this to be true based on my read of the law. Have you seen actual examples where this is still considered commingled?

    I keep my tenants security deposit in a separate account at a separate bank from my primary personal accounts, and I was fairly certain based on my read of the law that this was enough.

  • Here we go again....JD asked a question...and it appears just wanted a simple answer...and it turned into THIS thread....
    Respect you neighbors, people...please!

  • Gil Jimenez Private Investigator; IL concealed carry trainer

    bleep - the ordinance cited by alderman, et al says this:

    the account and sec dep "shall not be subject to the claims of any creditor of the landlord or of the landlord’s successors in interest."

    that's the hard part - having money stashed somewhere, somehow where it can't be reached through a court judgment against the landlord.

    if your name is on the account, the court and creditor can get to it.

    actually, if the property is titled to the LLC humboldt mentioned and the LLC is the entity sued, then the LLC's bank account can also be attached.

    in effect, the CRLTO does everything possible to keep a landlord from holding a security deposit.

    it is rumored that one way to stay in compliance is to place the sec deps in a trust account. i will be exploring that possibility further.

  • thanks, that's very interesting. I guess it all depends on the phrase "subject to the claims" -- does that mean subject to any and all future claims, or does it mean subject to existing claims? Therein lies the dangerous parsing of language...

    thanks so much for that info, I appreciate it!

  • future alderman future alderman

    please stop saying 10 cents unless you mean 10 dollars

  • "please stop saying 10 cents unless you mean 10 dollars"

    but it is 10 cents.

    https://www.cityofchicago.org/city/en/depts/dcd/supp_info/security_depositinterestrates.html

    The rate for 2015, 2016 and 2017 was 0.01%.

    On a $1,000 security deposit, 1% would be $10. 0.01% would be 1/100th of that -- which is TEN CENTS.

  • Tomorrow is another day Happy resident of North Park Village

    Yes, it is only 10 cents. I was so embarrassed to give tenants their 10 cents interest back each year that I would give them $1.00.

    And, sort of on the subject, make sure that the security deposit receipt is dated within 5 days of receipt of the money. Due to a wire transfer and lags in posting time, a tenant sued the LL for the 1 day beyond receipt, even though LL had an email showing that on that date, the funds were not deposited yet; But I have to admit he was sort of a pri&%. He complained that during a blizzard, the sidewalk was not shoveled!

  • honestbleeps, if you are a landlord and are holding security deposits you may want to consult with an attorney who is familiar with housing law and get a legal interpretation.

    Self-interpretation of this many-faceted heavy-handed pro-tenant manifest can be fatal...to your pocketbook.

    Some of us have been or have been around landlords trying to maneuver within the CRLTO manifest and it is full of landmines. You are bound to step on one if you get the wrong tenant. The stories I have heard and the cost of $$$$$, time, stress, and other resources on a landlord have pushed some out of the small-time landlord business, has hardened others, and it inevitably changes the status quo. The rational choices available to a landlord post-CRLTO pocket-picking are very slim unless working for free is one's acceptable standard.

    "shall not be subject to the claims of any creditor of the landlord or of the landlord’s successors in interest" has been a warranted and beneficial clause. When there is bankruptcy, foreclosure, divorce, etc. it is all very unclear to the tenant what is going on in the life of the landlord. So that security deposit must be protected.

    However, to obey the law regarding avoiding commingling funds, walk into a bank, demand to open an interest bearing account as an individual and refuse to provide your social security number. The bank cannot open that account for you. It is Federal law that any interest bearing account be associated with a social security number (or equivalent). Because interest, even 10 cents worth, is subject to income tax. Individual owners have to form an LLC or Corporation (or as Gil wisely pointed out this may not be compliant), or cease to collect security deposits. Again, consult with your attorney.

    And on the 6th day, god created the 5 day notice. And the late fee.

  • @humboldtwriter:

    "Is there some reason that you haven't purchased a home?"

    I'm hoping that this is just a bad joke and that you're really not that detached from reality.

  • Why is it a bad joke? 15 years ago, real estate was much more affordable in Logan Square. I worked very hard during my early 20s and was able to save up a down payment living with my parents for almost 2 years after college.

    Now I'm 15 years into a mortgage on a small condo and have a lot more to show for it than my friends who overspend and live paycheck to paycheck.

    It isn't a luxury to be a home/condo/etc owner. It just takes planning and foresight, cutting back on expenses, and being frugal. Am I detached from reality for being raised with parents who still balance a checkbook (as do I), didn't spend beyond our means, didn't pay for things we couldn't afford with credit? Seems pretty normal to me.

  • future alderman future alderman

    not everyone wants to own

  • The bad joke was implying that owning a home is as simple as taking a trip to the house tree and picking one you like off of a branch. The truth is that the market isn't what it was 15 years ago and even then the majority of people weren't in a position to purchase property. Not everyone has parents that they can live with to save money. Not everyone has easy access to higher education. Everyone doesn't start on the same playing field. For a lot of people owning a home is a long term goal that might only be achievable after decades of hard work.

  • John, if I was telling a bad joke there would be no uncertainty about it.

    The only constant in the universe is change.

    Your oversimplification comparing purchasing a home to picking fruit off of a tree is absurd. Who planted the tree? Who nurtured it for years? Who prunes it, wards off insects, animals that damage bark, etc. How many trees died? There is a lot that comes ahead of the simple act of fruit picking. If anything has been that easy for you good for you! I am happy for you! But it hasn't been that way for me or most owners that I know.

    Something that has changed is that ordinary people had to come up with a 10 or 20% downpayment 15 years ago. Currently with FHA loans it is only 3.5%. Should everyone who paid 10 or 20% be reimbursed for the unfairness? In some ways it has gotten EASIER to purchase a home.

    Another example of it being easier/better to buy right now: current interest rates remain historically low in the 4% range vs. many buyers who paid much more years ago. In the year 2000, the average 30-year fixed interest rate was OVER 8%. in 2017 the average for the same was 4.1%. Should all of those homeowners get a refund because of this unfairness?

    What does that mean? A savings for current buyers of hundreds of dollars per month that was only going toward paying the bank interest, not the principal.

    Here is a historical look at interest rates:

    https://www.valuepenguin.com/mortgages/historical-mortgage-rates#nogo

    I'd say the "save and sacrifice" part of my comment about home ownership might indicate to some that I am in touch with the difficulties. Whatever you decide and/or whatever circumstance you have @John from Cincinnati and @future alderman I wish you the best as neighbors and hope you do well.

  • Most banks allow one to open the equivalent of a security deposit escrow account sometimes called a landlord tenant account which is interest bearing. The bank acts as a third party to the transacting parties. We open such an account which requires us to go into the branch when we have a new tenant. It takes roughly fifteen minutes in the bank. We use PNC bank which offers this escrow/sub accounting service. We submit a W9 containing the tenant’s SSN and yes we provide our own SSN. This is not commingling of funds and it cannot reasonably be suggested that these funds are subject to claims of any creditor of the landlord. We only have a few units, so this would become tedious if we had had more units and we would consider a move in fee.

  • House-Frau Homemaker, mom, animal lover

    Do you have to open a seperate account for each tennant or can you “co-mingle” security deposits from multiple tenants in 1 account? You have to pay them their .01 each& every year, right?(assuming they re-up the lease). My hubby&I(we just have 2 sm. house rentals)&we have told our tennant to deduct their interest off their 1st mo. rent off the 1st mo of their new lease. This way there is a record& it is written that way in the new lease agreement.

  • We have seaparate accounts for each unit. W9 is requested by the bank and submitted to IRS showing interest income, albeit paltry amounts, on behalf of the tenant. We have been advised that the escrow aspect of the account involved performance of the lease contract by both parties and therefore is specific to each account. This is further evidence of segregation of funds not subject to creditor claims against the landlord.

  • future alderman future alderman

    thanks Brett!

  • Brett, are the bank accounts holding security deposits for Chicago tenants & the W9's issued for interest earned on the SD's in the landlord's name/SS# or the tenant's name/SS#?

  • Humboldtwriter, the bank asks for a signed W9 from the tenant only with their name and SSN. The account itself, the banking customer is the landlord.

  • Great to know. Thanks! Sounds like the solution. Must not be possible with every bank unless it is something new. Do you have a business account with the bank? Or did you simply ask for a specific type of account? Can you share with the list which bank offers this service?

  • I believe most banks offer said account and they are not new, but not necessarily well advertised. Our accounts of this type are with PNC and they are savings accounts not in a business name. Chase, B of A and others definitely have these types of accounts.

  • Brett, I'm going to let some of my buddies know to check with their banks and specifically ask for this type of account. Many have tried in the past and were offered accounts that were $5 to $8 per month per security deposit account in order to comply with CRLTO.

    Many landlords I know have tried again and again to figure out how to comply with all of the parameters of the CRLTO. There is a frustration amongst many owners regarding the difficulty of doing so. If these savings accounts are free this is entirely the solution and could help to keep rent prices stable. But most have tried and failed and just figure out a workaround like move-in fees and higher rents.

    Landlords who only charge move-in fees and do not hold a security deposit are raising their risk by not having any leverage over an individual tenant who may damage a unit or leave without paying. If the move-in fee approach fails and a tenant leaves a unit damaged or with unpaid rent, those losses typically translate into an increased rental price for the next tenant to make up for losses. It is a vicious cycle. Landlords end up finding it very difficult to make a bad tenant pay, and the new tenants who haven't done anything wrong get punished and pay the price.

    If you don't see the relationship between non-performing tenants and gentrification it is pretty clear to me. When folks screw the landlord it forces the landlord to make very difficult decisions about how they run their business. Following a run of bad tenants, about all a landlord can do is either move in, sell the building, or the most common solution is to raise rents.

    I appreciate all of the input Brett, Gil and others have put into this convo. This is a great forum for us to share our experiences, including problems and solutions. Looks like Brett provided the best info of all. Thanks.

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