You're a new landlord and you have a great rental property here in Schaumburg, IL. You're probably excited to find the perfect tenant and start bringing in some rental income. However, one part of the tenant placement process you must consider is security deposits.
Landlords need to understand Illinois law on the subject if they want to avoid any legal trouble. We're here to let you know a few crucial facts to help you set and collect security deposits the legal way.
Landlord Advice: How Much Should You Charge?
Generally, security deposits are the same as one month's rent. Landlords can charge more if they wish. You may also choose to generate more interest by offering lower security deposits as incentives.
An estimated 87% of renters pay $600 as their security deposit, though this can vary widely depending on location and demand.
If you have a building with 25 units or more and you've held a tenant's security deposit for six months or longer, Illinois landlords must pay their tenants interest on the amount or use the interest as a rent credit every 12 months.
When Does a Tenant Get the Deposit Back?
Whether a tenant gets their full deposit back, a partial amount or no deposit depends on many factors. As a landlord, you must remain fair.
The Illinois Security Deposit Return Act states that tenants have the right to get their security deposit back in full within 45 days if the following apply:
- They lived in a building with five or more units
- The rental unit is clean and in acceptable condition
- The tenant doesn't owe any back rent
So, what does "acceptable condition" mean? Generally, this means there was no damage beyond normal wear and tear.
You should understand the difference between acceptable wear and tear and property damage. For instance, there might be some light scuffs on the floor or small nail holes in the walls. However, this is different from a tenant leaving large holes, pet stains, broken windows, etc.
If you don't return the full amount, you must include an itemized statement with the cost of damages and a paid receipt within 30 days after a tenant moves out.
Illinois Security Deposit Laws
Illinois has security deposit laws in place to protect both tenants and landlords. If landlords don't send a written notice within 30 days (45 without deductions), then they receive penalties.
Landlords may have to pay up to two times the cost of the security deposit, plus applicable fees, such as attorney and court costs.
Investing in property management services ensures that you can maximize your investment will following all local and state laws regarding security deposits.
Security Deposits Made Easy
As an Illinois landlord and rental property owner, you must familiarize yourself with the state laws concerning security deposits. Failure to do so can result in penalties and court battles.
PMI Chi-Town makes security deposits easy, as we can help you manage everything from tenant screening to rent collection and more. Get a free property analysis today to see how you can start boosting your rental income potential.