A partner and I will soon be aggressively looking to execute a BRRRR deal in Chicago, but we weren't sure if there were any necessary regulations or forms we needed to complete in order to issue rentals and acquire tenants. Any information about the legal side of this process would be greatly appreciated!
I'm in a suburb so I can't really give any first hand experience.... -- Bud
William is right to refer you to the landlord tenant ordinance. That lays out the main framework for rental properties. There aren't really any other forms or regulations but if you have any specific questions feel free to send me a message. I buy, sell, and lease out properties all the time for myself, clients and employer...would be happy to share my experience.
@Ryan Toopes - without a doubt, CHicago is one of the most tenant friendly places on the planet. If you violate the Tenant ordinance, you are held liable for 3 times the security deposit. So i know many people stopped taking deposits and now charge a non-refundable "move in fee", because 3 times 0 is 0.
But beyond that, attempt to do an eviction... It takes you some time to file, (and if you own the property in the name of an entity, such as a LLC, you are not legally allowed to file or represent yourself. Meaning you MUST hire an attorney. Then the tenant has the right to go in and request a continuance at the first hearing. So another 45-60 days goes by. They get to live without paying and you have to wait. Then, let's say you get the writ.. that writ then goes to the sheriff, which could take weeks to months to enforce. And if you aren't present, or have someone present. you have to re-schedule with them.
The entire process could take 8-10 months in some cases. Trust me, as much as you can screen tenants, have a great process, etc. At some point you will have to evict someone. It may not happen right away, but it will happen. This process is why so many people have said the phrase "Cash for Keys".
Educate yourself 100% on the Ordinance because you will need to follow it to the letter. To include something like "putting the bank branch name/address" where you hold the security deposit in the lease. Also returning the interest earned each year to the tenant from the security deposit. etc.
There are attorneys that post ads in Student unions near colleges, such as Loyola, Northeaster, DePaul, etc. The headlines are "One Free Months Rent". They ask you to review your lease, if the landlord has a violation, the represent the student/tenant on a contingent basis (meaning they get paid when they collect a judgment). This means, the tenant pays nothing. You get sued, and if you took a security deposit of even a months rent, then you owe 3 times that. The attorney keeps 2, and gives the rest to the student, who most likely uses it on beer money.
You, the landlord then are out that judgment but also the time and attorney fees, let alone any aggravation. SO be careful and read that ORDINANCE fully.
Thanks for all of this information! You all have been very helpful!
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