Garage Security Deposit

[Nicole Rhim]

Hello,

I am updating lease agreements, and since I will be moving out of the building soon, I am trying to set up a lease to rent the garage space. Do the security deposit rules in Chicago apply to garage spaces or just apartments rented? Thanks.

[James Jones]

In Chicago, this is one of those areas where you need to be very careful.

Yes, the Chicago RLTO can apply to garage spaces, depending on how they are leased.

Here’s the practical breakdown:

• If the garage is leased as part of a residential tenancy (same tenant, same lease, or a rider/addendum tied to the apartment), then RLTO security deposit rules apply. That means interest requirements, timelines, receipts, segregation, and penalties all come with it.

• If the garage is leased separately under a standalone, non-residential agreement (separate contract, not tied to a dwelling unit, not required for occupancy), you have a stronger argument that RLTO does not apply. Many Chicago landlords do this intentionally to avoid RLTO exposure.

However, Chicago courts tend to look at substance over form. If the garage is clearly incidental to residential use, simply calling it “separate” may not protect you.

Best practices to reduce risk:

Use a separate garage license or lease, not an addendum to the apartment lease.

Avoid labeling the payment as a “security deposit” if possible. Many landlords use a garage access fee or last-month hold instead (review with counsel).

Make it optional, not required for tenancy.

If you do collect a deposit, assume RLTO applies and comply fully. The penalties for getting it wrong are not worth the gamble.

If this is material money or you’re scaling, I strongly recommend having a Chicago landlord attorney review the structure. RLTO violations are strict-liability and very tenant-friendly.

Garages are not automatically exempt in Chicago. Structure matters more than labels.