Chicago Security Deposit Law: What the RLTO Requires of a Landlord

Who the ordinance covers

The Residential Landlord and Tenant Ordinance applies to every rental agreement for a dwelling unit in the City of Chicago, wherever the agreement was made, subject only to a closed list of exclusions. The one that reaches ordinary landlords is this:

Rental of the following dwelling units shall not be governed by this chapter, unless the rental agreement thereof is created to avoid the application of this chapter: (a) Dwelling units in owner-occupied premises containing six units or fewer; Chicago Mun. Code 5-12-020(a) (extract)

Read it as two conditions, both required. The owner must live in the building, and the building must contain six units or fewer, counting the owner’s own unit and every unit available to be lived in whether or not it is occupied. A three-flat the owner lives in is excluded; a seven-unit building the owner lives in is covered; a two-flat the owner does not live in is covered. The courts filled in the edges under the exclusion’s earlier wording, “buildings”: a co-owner living in the building counted as owner-occupancy, a coach house behind an owner-occupied building was owner-occupied, and townhouses separated by firewalls were separate buildings, so an owner living in one and renting the next was not owner-occupied as to the rental. The current text says “premises”; on our reading those cases still guide it, but no court has applied them to the new word.

Condominiums and single-family houses are covered. The exclusion list is closed, and it names a co-op unit occupied by the holder of a proprietary lease; it says nothing about condominiums or about a rented house. The City’s own summary lists “owner occupied co-ops and condominiums” as excluded, which the code does not say. The other exclusions are hotel and rooming-house stays until the tenant has been there 32 days paying monthly rent, institutional and school housing, a buyer in possession under a purchase contract, and an employee whose occupancy depends on the job. An excluded building still owes state law, which since 2024 reaches every residential landlord.

The account: federally insured, interest-bearing, in Illinois, disclosed

A landlord shall hold all security deposits received by him in a federally insured interest-bearing account in a bank, savings and loan association or other financial institution located in the State of Illinois. A security deposit and interest due thereon shall continue to be the property of the tenant making such deposit, shall not be commingled with the assets of the landlord, and shall not be subject to the claims of any creditor of the landlord or of the landlord’s successors in interest, including a foreclosing mortgagee or trustee in bankruptcy. Chicago Mun. Code 5-12-080(a)(1)

Three more rules sit in the same subsection. The name and address of the institution must be disclosed clearly and conspicuously in the written lease the tenant signs; where there is no written lease, the landlord has 14 days from receiving the deposit to notify the tenant in writing, and 14 days to notify a move between institutions. A single payment covering first month’s rent and the deposit is allowed if the deposit is moved into the separate account within five business days. And interest the account earns above what is owed to tenants is not commingling. The courts have been unforgiving about the rest: depositing $20 and $25 deposit increases into the rent account was commingling with no small-amount exception, and the two-times award was measured on the whole deposit.

The receipt, given when the deposit is taken

At the time of receiving a deposit the landlord, or the agent who takes it, must give the tenant a receipt stating the amount, the name of the person receiving it and, for an agent, the name of the landlord, the date, and a description of the dwelling unit, signed by the person receiving the deposit. An electronic payment may carry an electronic receipt with an electronic signature. The receipt describes the unit, not its condition, and the receiver signs it, not the tenant; several landlord sites have both details backwards. The sanction is in the text:

Failure to comply with this subsection shall entitle the tenant to immediate return of security deposit. Chicago Mun. Code 5-12-080(b)(1) (extract)

An appellate court has held that a missing receipt also triggers the two-times damages, and that a 2007 lease did not serve as a receipt for a $10 deposit increase paid in 2009. Every increase is a deposit of its own.

Interest on the deposit

A landlord who holds a security deposit or prepaid rent for more than six months owes interest, accruing from the beginning of the rental term, at the rate the City Comptroller announces for the year the rental agreement was entered into. The rate for 2026 is 0.01%. Interest is paid within 30 days after the end of each 12-month rental period, by cash or credit toward rent, and whatever remains is paid with the refund. There is no unit threshold and no minimum amount. The Chicago deposit interest guide has the full rate history, the formula, and the one cure the ordinance offers for an interest mistake.

Return and deductions: 45 days, 30 for the statement

The landlord shall, within 45 days after the date that the tenant vacates the dwelling unit or within seven days after the date that the tenant provides notice of termination of the rental agreement pursuant to Section 5-12-110(g), return to the tenant the security deposit or any balance thereof and the required interest thereon; provided, however, that the landlord, or successor landlord, may deduct from such security deposit or interest due thereon for the following: (1) Any unpaid rent which has not been validly withheld or deducted pursuant to state or federal law or local ordinance; and (2) A reasonable amount necessary to repair any damage caused to the premises by the tenant or any person under the tenant’s control or on the premises with the tenant’s consent, reasonable wear and tear excluded. Chicago Mun. Code 5-12-080(d) (extract)

Two deductions and no others: unpaid rent, and a reasonable amount to repair damage beyond reasonable wear and tear. A cleaning charge has to fit the second. Where damage is deducted, the landlord must deliver or mail to the tenant’s last known address, within 30 days, an itemized statement of the damage and the estimated or actual cost of repairing or replacing each item, with copies of the paid receipts attached; where estimates are given, the paid receipts, or a certification of actual cost for work done by the landlord’s own employees, follow within 30 days of the statement. The ordinance gives no start date for that 30-day statement clock; the City’s publications count from the move-out date, and so does this tool. An appellate court counted the 45 days as calendar days, and ran the receipts clock from the date the estimate was mailed.

Seven days after a fire. If the tenant ends the lease after a fire or casualty by the notice section 5-12-110(g) allows, the deposit is due within seven days of that notice, not of the move-out. The tenant has 14 days after moving out to send that notice, so the seven-day clock can start well after the tenant has left. The ordinance says “deliver or mail” and nothing about email, has no forwarding-address condition, and has no checklist or inspection rule.

If the building is sold

A successor landlord is liable to the tenant for the deposit and interest, and must notify the tenant within 14 days of the transfer. The seller stays jointly and severally liable unless the deposit is transferred to the buyer and the tenant is told within ten days. Crediting the buyer with the deposits at closing has been held a lawful transfer. State law separately keeps the seller jointly liable with the buyer, so a Chicago seller answers to both.

What breaking any of it costs

if the landlord fails to comply with any provision of Section 5-12-080(a) – (e), the tenant shall be awarded damages in an amount equal to two times the security deposit plus interest at a rate determined in accordance with Section 5-12-081. Chicago Mun. Code 5-12-080(f)(1) (extract)

The Illinois Supreme Court has held that a landlord’s duty to comply is absolute and that there are no exceptions: no good faith, no need for the tenant to show willfulness; the appellate court has refused a small-amount escape. The award is one award per deposit however many rules were broken, it goes only to the tenant who paid the deposit, the tenant’s attorney fees are added, and the claim must be brought within two years. The deposit itself is returned on top: the two-times figure is damages, not a refund.

The one cure. If interest was paid on time but the amount was wrong, the tenant must give written notice and the landlord has 14 days either to pay the correct interest plus $50 or to send a written explanation of how it was calculated; only then do damages follow. An appellate court has held the cure is available only where some interest was actually paid on time: late or missing interest gets no such chance.

The two summaries that go with every lease

Every new lease and every renewal must have two documents attached: the City’s summary of the ordinance, and the current year’s summary of the security deposit interest rate. A tenant who does not receive them may terminate by written notice naming an end date within 30 days of the notice, and recovers $100. Both are required, not one or the other. The current summary is the City’s December 2023 revision, and the rate summary is published each year by the Department of Housing.

Move-in fees

The ordinance is silent on move-in fees: neither “move-in” nor “refundable” appears in it. An appellate court held that a $350 non-refundable move-in fee on $715 rent was neither a security deposit nor prepaid rent, so the deposit rules did not reach it; the label and the amount decided it, and the fee’s size relative to the rent was a fact of that case, not a rule. Going the other way, an unpublished 2022 order treated a $1,000 fee on $3,500 rent, not labelled non-refundable and large enough to cover damage, as a disguised deposit. Whether a separately paid pet deposit is part of the security deposit is unsettled: the Supreme Court treated a $100 pet deposit written into the lease’s deposit clause as part of the deposit.

From January 1, 2027, a new state law requires every non-optional fee to appear on the first page of a lease and bans eleven kinds of fees, including a fee for routine maintenance and upkeep, for leases entered into after that date. It does not ban move-in fees, and the words “security deposit” do not appear in it, but a “move-in fee” that really pays for turnover cleaning or painting may run into the routine-maintenance ban. The law changes guide covers it.

What is pending before the City Council

Two ordinances would rewrite section 5-12-080, and they disagree. Both were “deferred and published” on September 23, 2026 with no final action; the Committee on Housing and Real Estate meets November 17 and the full Council on December 8 and 9, 2026. Neither is law, and this site watches the City Clerk’s records for both.

• The Mayor’s “Protecting Renters Ordinance” (SO2026-0026554). From January 1, 2027: a deposit may not exceed one month’s rent; the interest sentence and sections 5-12-081 and 5-12-082 are repealed, with accrued interest returned at the end of the tenancy or at renewal; the account need no longer be interest-bearing and several tenants’ deposits may be pooled; a tenant may be required to pay only rent, a deposit, up to one month’s prepaid rent and a short list of allowed fees, so move-in fees would be banned; the damages subsection is replaced by fines and a new two-times award for failure to return; and the return, cap and fee rules would reach owner-occupied buildings of six units or fewer.
• The “Fair and Accountable Illinois Rental Ordinance” (SO2026-0027202). From July 1, 2027: a deposit cap of one and a half months’ rent; interest, the damages subsection and its cure struck; a two-times award only for failure to return the deposit; move-in fees allowed if reasonably related to the landlord’s costs.

So there are three futures: nothing passes and this page stands; the Mayor’s ordinance passes and a one-month cap with no interest starts January 1, 2027; or the rival passes and a one-and-a-half-month cap with no interest starts July 1, 2027. We will re-read the Clerk’s records after the December meetings whatever the watch reports. Checked October 25, 2026.

State law still applies, in Chicago and in the excluded buildings

The ordinance preserves state law, and the Security Deposit Return Act reaches every residential landlord in Illinois since 2024, so a Chicago landlord answers to both. The ordinance is stricter on most points it covers, but not every one: it accepts a certification of actual costs for work done by the landlord’s employees where the Act requires paid receipts, and it says only “deliver or mail” where the Act requires the receipts, and a full refund, to go in person or by postmarked mail, so meet both. A landlord whose property has 25 or more units in one building or a contiguous complex also owes interest under the state Interest Act, and paying the higher of the two figures satisfies the amount under both, on our reading, though each rule keeps its own payment schedule. In an owner-occupied building of six units or fewer, where the ordinance does not apply, the state Act’s 30-day statement and 45-day refund rules are the whole answer.

Work out a Chicago return

The free Illinois deposit tool applies these rules when you choose Chicago: the 45- and 30-day clocks, the seven-day fire clock, the interest at the right rate for each agreement year, the owner-occupied exclusion, and a statute-cited return letter that cites the ordinance beside the state Act, all in your browser with nothing stored.

Chicago security deposit law: common questions

Does the Chicago security deposit ordinance apply to a small landlord?

Usually yes. The Residential Landlord and Tenant Ordinance covers every rental agreement for a dwelling unit in the city, with a closed list of exclusions. The one that matters to small landlords is a unit in an owner-occupied building of six units or fewer, and it needs both conditions: the owner must live in the building, and the building must have six or fewer units, counting the owner’s own. A two-flat the owner does not live in, a rented condo, and a rented single-family house are all covered. The old "five or more units" rule was a state rule, and it was repealed in 2024. (Chicago Mun. Code 5-12-010, 5-12-020(a))

How long does a Chicago landlord have to return a security deposit?

Forty-five days after the tenant vacates, with the required interest, less lawful deductions. If the tenant ended the lease after a fire or casualty by notice under section 5-12-110(g), the deposit is due within seven days of that notice instead. Where damage is deducted, an itemized statement with copies of the paid receipts must be delivered or mailed within 30 days, and receipts for any estimated cost within 30 days after that. (Chicago Mun. Code 5-12-080(d))

Where does a Chicago landlord have to keep the security deposit?

In a federally insured interest-bearing account at a bank, savings and loan or other financial institution located in Illinois, separate from the landlord’s own money. The deposit and its interest stay the tenant’s property and are beyond the reach of the landlord’s creditors, including a foreclosing lender or a bankruptcy trustee. The name and address of the institution must be disclosed clearly in the written lease; without a written lease, in writing within 14 days of receiving the deposit. A single check covering rent and deposit is allowed if the deposit is moved into the separate account within five business days. (Chicago Mun. Code 5-12-080(a))

What must a Chicago security deposit receipt say?

The amount, the name of the person receiving it and, if that person is an agent, the name of the landlord, the date it was received, and a description of the dwelling unit, signed by the person receiving the deposit and given at the time it is received. A receipt for an electronic payment may be electronic, with an electronic signature. The receipt describes the unit, not its condition, and it is signed by the receiver, not the tenant. Failing to give one entitles the tenant to immediate return of the deposit, and a court has awarded the two-times damages for it. (Chicago Mun. Code 5-12-080(b); Faison v. RTFX, Inc., 2014 IL App (1st) 121893)

What is the Chicago security deposit interest rate for 2026?

0.01% for rental agreements entered into in 2026, as announced by the City Comptroller. Interest is owed on a deposit, or prepaid rent, held more than six months, accrues from the beginning of the rental term, and is paid within 30 days after the end of each 12-month rental period, by cash or credit toward rent, and with the refund at the end. (Chicago Mun. Code 5-12-080(c), 5-12-081)

What is the penalty for violating the Chicago security deposit ordinance?

Damages equal to two times the security deposit plus interest, for a failure to comply with any provision of subsections (a) through (e): the account, the receipt, interest, the return rules and the successor rules. The Illinois Supreme Court has held the duty is absolute, with no good-faith exception, and the courts treat the award as a single one per deposit however many rules were broken. Only the tenant who paid the deposit can sue, the claim must be brought within two years, and a prevailing tenant also recovers attorney fees. One cure exists: if interest was paid on time but the amount was short, the tenant must give written notice and the landlord has 14 days to pay the correct amount plus $50 or to explain the calculation. (Chicago Mun. Code 5-12-080(f), 5-12-180; Lawrence v. Regent Realty Group, Inc., 197 Ill. 2d 1 (2001); Landis v. Marc Realty, L.L.C., 235 Ill. 2d 1 (2009))

Does Chicago cap security deposits?

Not today. The ordinance sets no maximum on the amount of a security deposit, and neither does state law. Two pending ordinances would change that: the Mayor’s "Protecting Renters Ordinance" would cap deposits at one month’s rent from January 1, 2027, and a rival ordinance would cap them at one and a half months’ rent from July 1, 2027. Neither has passed. (Chicago Mun. Code 5-12-080; SO2026-0026554; SO2026-0027202)

Is a move-in fee legal in Chicago?

The ordinance says nothing about move-in fees, and an appellate court held that a $350 non-refundable move-in fee on $715 rent was neither a security deposit nor prepaid rent under it, so it was not subject to the deposit rules. The label and the amount matter: a $1,000 fee not labelled non-refundable, on $3,500 rent, was treated as a disguised deposit in an unpublished 2022 order. From January 1, 2027 a new state law requires every non-optional fee to appear on the first page of the lease and bans fees for routine maintenance, which a turnover-cleaning fee may run into. The pending Protecting Renters Ordinance would ban move-in fees outright. (Steenes v. MAC Property Management, LLC, 2014 IL App (1st) 120719; Andrews v. Qiu, 2022 IL App (1st) 200544-U; 765 ILCS 705/35)

What has to be attached to a Chicago lease about the deposit?

Two documents, with every new lease and every renewal: the City’s summary of the ordinance, and the current year’s summary of the security deposit interest rate. A tenant who does not receive them may terminate the lease by written notice and recovers $100. An appellate court held that both documents are required, and another that a tenant who paid no deposit cannot sue over the missing rate summary. (Chicago Mun. Code 5-12-170; Kopnick v. JL Woode Management Co., 2017 IL App (1st) 152054)

Sources

• Chicago Municipal Code 5-12-080 (security deposits), with 5-12-010, 5-12-020, 5-12-081, 5-12-170 and 5-12-180
• City of Chicago, RLTO Summary (revised December 2023)
• Chicago Department of Housing: security deposit interest rates
• City Clerk record, SO2026-0026554 (Protecting Renters Ordinance) and SO2026-0027202 (FAIR)
• Lawrence v. Regent Realty Group, Inc., 197 Ill. 2d 1 (2001): the duty is absolute
• Landis v. Marc Realty, L.L.C., 235 Ill. 2d 1 (2009): the two-year limitations period
• Faison v. RTFX, Inc., 2014 IL App (1st) 121893: the receipt, and the interest cure
• Boyer v. Buol Properties, 2014 IL App (1st) 132780: paid receipts and calendar days
• Plambeck v. Greystone Management, 281 Ill. App. 3d 260 (1996): commingling, and a single award
• Steenes v. MAC Property Management, LLC, 2014 IL App (1st) 120719: a move-in fee outside the deposit rules
• Kopnick v. JL Woode Management Co., 2017 IL App (1st) 152054: both summaries required
• The Illinois security deposit tool and full cited rules

About this page

Every quoted passage above is the codified text of the Chicago Municipal Code as the City’s publisher serves it, read there rather than in a summary, and the case holdings are taken from the published opinions. The code publisher blocks automated reading, so this ordinance is re-read by hand rather than by the weekly watch; the City Clerk’s records of the pending ordinances are watched weekly. How we verify the law explains the process. This is general information that cites the law, not legal advice, and Orygn LLC is not a law firm. For advice about your situation, talk to a licensed Illinois attorney.