I recently had an issue with the power going out in a Chicago unit of mine. ComEd turned the power off due to non-payment(though ComEd never warned me or tenants which they are required to do by Illinois law), but I had the power back on well within 72 hours (business hours) which is the time limit Chicago gives landlords before tenants can terminate the lease. After about 24 hours my tenants sent me a notice of intent to vacate 4 months before the end of their lease term, which would be allowed if 72 hours had elapsed, but they hadn't. So for some reason they use the power outage to justify not paying rent for the entire month of May. They're now two weeks overdue, and now they've hired one of those Security Deposit chasing attorneys to go after their deposit and the penalty for when landlords don't hold it in a separate account. I've never held it in a separate account because I've always had good relationships with my tenants and wasn't aware of that requirement until recently. Even worse, now the tenants are saying that they can't move out at the end of the month(like they said they were going to in their Notice of Intent to Vacate) because they can't afford to because of the financial hardship related to the power outage. What?!? They didn't even leave the unit, they had heat, and some of their groceries went bad. I explicitly stated multiple times in emails that I would reimburse them $100/night for the outage plus $150 for groceries, but I would only reimburse them AFTER they paid rent. Can a tenant sue for 2x their deposit when they are in clear violation of their lease? I've done everything that I'm obligated to in the city of Chicago and more. The power outage was a screw up on my part but I've been very forthright with my tenants and have offered to pay for damages. Does anybody have any advice for how to get these people out of my unit? I've read the horror stories about the Chicago eviction process. Thanks for any help!

I just wanted to bookend this thread and add to the record here for all other Chicago landlords that are threatened by tenants with a 2x security deposit fine. Note: the following are only my opinions based on a recent experience and conversations with attorneys. What follows is not legal advice, and you should always consult an attorney that will be able to hear you out on the specifics of your particular situation. In the end, my tenants never ended up taking legal action to get their 2x security deposit( in addition to their original security deposit.) I cannot say for sure why they didn't, but after conversations with 2 attorneys that specialize in tenant-landlord law, it sounds like judges hate these hearings and are very skeptical of any claim to the 2x fine. Unless the landlord was very late in returning the security deposit or did not provide adequate documentation for charges against the security deposit, judges will be very annoyed by having to use the courts' time on these cases. Attorneys are conscious of this, and do not want to get on a judge's bad side representing a client that may technically be owed a fine, but is behaving opportunistically, and taking advantage of a landlord that didn't do anything to hurt the tenant in any material way. There are attorneys that market aggressively to pick up 2x security deposit cases, but based on my conversations with 2 attorneys, they are very selective with regard to which cases they bring before a judge. What I believe really saved me from having to pay this fine is that attorneys arguing these cases are conscious of their reputations with judges, and they are not likely to take on a client's case based solely on a technical violation if the tenants' security deposit was returned in timely fashion. They are especially unlikely to take on a case if the client/tenant has withheld rent or done anything else that violates their lease. The most important thing I want to share with this forum is that if a Chicago tenant threatens you with a 2x security deposit fine, the situation is not as black and white as others on this forum make it out to be. If you're threatened with a fine after returning their security deposit or before the end of the lease term, I would be very skeptical of the threat (especially if it comes directly from them and not an attorney). If the threat comes from an attorney, I would search for any information about that attorney to see if they have a reputation, good or bad. If they are reputable, I would call an attorney right away. If you can't find any information (LinkedIn, Google search, etc.) about the attorney, I would be skeptical and slower to pull out the checkbook. If I followed the advice of some of the members who were tsk-tsking me on this thread, I would be $4,800 in the hole. Instead, I paid for an hour long consult with an attorney that specialized in tenant-landlord law. If you find yourself in a similar situation, let me know and I'd be happy to put you in touch with the attorney that helped me out. Thanks to @Mike S. and Account Closed, among others, for steering me in the right direction.

Unfortunately what a lot of people are saying is right, you are screwed. In Chicago landlords have literally no rights. Your only defense is stringent selection criteria for tenants and to NEVER EVER EVER take a security deposit. The Residential Landlord Tenant Ordinance (RLTO) is supposedly there to protect tenants from aggressive landlords, but what it really does is protect deadbeats, gangbangers, and "professional tenants" while raising costs for everyone else. Thanks to the RLTO all tenants now pay an additional half month or so of rent every year because anyone who knows what they are doing does non-refundable move in fees with no deposit. If you were a good tenant you used to get your money back, now you lose it and the benefit of that cash goes to some rotten tenant who trashed their landlord's apartment and doesn't get stuck for a whole month's deposit. The real beneficiary of the RLTO is, of course, the attorneys. The law provides for virtually guaranteed and generous fees for attorneys at the landlord's expense. You seem to have a good attitude about this though, it sucks because it is real money, but real estate is a series of expensive learning experiences.

I can't believe some of the advice in this thread. The power go shut off due to the tenants non payment. Now they are refusing to pay rent AND want 2x security deposit back on top of breaking their lease. These clowns have zero legal standing. I had the exact same situation with a tenant last summer and I not only kicked them out, but when I withheld 1/3 of their security deposit for the utilities they came up with all kinds of retarded stuff and sent me emails with subject lines such as "the evidence is clear". Yeah, the evidence was clear that they were lying through their teeth and changing their story from one email to another and that they knew what the address was. Long story short, these people were so dumb I literally stopped arguing with them hoping they would bring their ridiculous argument to court. They never did. A week later they cashed what was left of their deposit and were on to their next scam. I should note that I kept some damages for a counter claim in case they did file something. I'd offer to file a claim against them for non payment of utilities, etc. and muck up their credit. Remind them they will not find a decent place to live with that on their record but it's their call if they want to continue with the scam. DO NOT BEND TO THEM!!

Eat the loss. Chalk it up to "education. Get those tenants out as quickly ass possible, before they cost you more money.

Wait, what?! Tenants Violated Lease and Want 2x Security Deposit?

Ray Harrell

Investor · Chicago, IL · Member since 2016 · 1k+ posts · 930 votes

9y

Why are they getting out of the lease because they failed to pay their electric?

0 Reply

Mike S.

Rental Property Investor · Huntsville, AL · Member since 2013 · 419 posts · 323 votes

9y

You would benefit from buying some time from a lawyer and even have a lawyer letter sent in response to the tenants lawyer. From the info given, the tenants seem savvy to landlord shakedown business and know many landlords will pay to make them go away (cash for keys). Notice given to delay eviction action, lawyer to shakedown landlord, staying to avoid payment as long as possible. Proceed to evict immediately according to the laws of your state. Don't delay any longer.

1 Reply

Deanna McCormick

Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes

9y

You need to download your State landlord tenant laws.

You need to provide proper services to your tenants, and not paying the electric bill so the power is shut off is just plain breach of contract, you use the 72 hour rule like it should protect you.. business hours? so totally how long was the power off...sounds like much longer than 72 hours

Your fishing for sympathy and you'll get none from me.

1 Reply

Brie SchmidtBusiness Member

Moderator

Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes

9y

@Stewart McMillan - The short answer is yes, they can (and will) get 2 times SD because you did not keep the deposit in a seperate interest bearing account under the RLTO.

Now, if you had power back on in 72 hours (not business hours) then they are in violation and the rent owed to you should be deducted from the fine you are going to incur.

https://www.cityofchicago.org/content/dam/city/dep...

Podcast Guest on Show #132

Second City Real Estate4.821 Reviews

Website View Page

4 Reply

Andreas W.

Durham, NC · Member since 2013 · 502 posts · 215 votes

9y

@Stewart McMillan

Your tenants seems to be well educated. How would they know that you don't have the security deposit in a separate account? Who pays for utilities, you or your tenants?

It is time to dance after your own music. If they haven't paid for May, they are in lease violation, meaning it is high time to start the process of pay or quit note, eviction proceedings and so on. That being said, you really, really need to know your state and local laws so that you don't make a procedural error. A lawyer can get you up to speed quickly plus most information should be online. Your tenant's ramblings are a separate issue. In my state they cannot withhold rent just because of a power outage. But again, you need to know your state and local laws.

1 Reply

Account Closed

IL · Member since 2016 · 64 posts · 31 votes

9y

Incredibly frustrating but you should hire a lawyer and try spend as little mindshare on it as possible. Like Brie mentioned, those are the rules (fair or not) and getting around them will be incredibly difficult and expensive and probably not even possible. Chalk it up as a learning lesson about the deposit rules. I had a somewhat similar situation and looking back, my mistake was letting it aggravate me for the few months it took to get resolved. I should have settled and moved on as soon as possible. Good luck!

2 Reply

Dmitriy Yeshin

Rental Property Investor · Scotch Plains, NJ · Member since 2016 · 38 posts · 11 votes

9y

@Stewart McMillan - Hi. Sorry to hear about your situation. Wanted to ask if you ran a background check on this tenant before signing a lease? Did they have any housing court records in the past? Did you check a reference from a previous landlord? Sounds like this is not the first time they are having a conflict with a landlord and I am curious if proper due diligence would have uncovered a problem ahead of time. Best of luck.

1 Reply

Jeff Burdick

Investor · Chicago, IL · Member since 2016 · 515 posts · 247 votes

9y

IMO, you should hire a lawyer and only communicate with them through the lawyer until this is resolved.

I think you're going to get penalized for the security deposit and potentially for the power outage as well.

1 Reply

Stewart McMillan

OP

Investor · Chicago, IL · Member since 2016 · 28 posts · 11 votes

9y

Originally posted by @Dmitriy Yeshin:

@Stewart McMillan - Wanted to ask if you ran a background check on this tenant before signing a lease? Did they have any housing court records in the past? Did you check a reference from a previous landlord?

Hey Dmitry, yes, checked all of those boxes. No court records, and called their previous landlord. I've wondered if they're professional tenants, but they've made a few procedural errors over the past few weeks which might save me. After seeing everyone's comments, I'm not optimistic I'll be able to avoid the 2x security deposit shakedown, but just going to play this one by the books, work through an attorney, and treat it as a lesson learned the hard way.

1 Reply

Brad S.

Oak Brook, IL · Member since 2017 · 9 posts · 2 votes

9y

Next time, do not charge SD. Instead, charge move in fee, move out fee to cover the repair damages. It sucks Chicago has this kind of rule that only makes bad people take advantage of it.

2 Reply

Dorothy Wulf

Chicago, IL · Member since 2016 · 165 posts · 49 votes

9y

They can sue for 2 x the security deposit plus attorney fees and court costs. You cannot comingle security deposit money with personal money and it must be in am interest bearing account.

0 Reply

Ronan M.Pro Member

Rental Property Investor · Chicago, IL · Member since 2015 · 352 posts · 281 votes

9y

@Stewart McMillan your original post suggests this all stems from the ComEd power cut for non payment of the bill. Who is responsible for paying the Com Ed bill for their unit ? You or them ?

1 Reply

Stewart McMillan

OP

Investor · Chicago, IL · Member since 2016 · 28 posts · 11 votes

9y

@Ronan M. Utilities were included with rent. Another lesson learned.

@Andreas W. @Account Closed, I took your advice and got in touch with an attorney. He said tenants did make procedural errors, but recommended I counter offer and avoid paying him to drag the situation out any further.

I countered at $2k and tenants have to move out on May 31st. Keep in mind renters haven't paid rent in May. Let's see what happens.

Any advice for how to make sure tenants don't try anything on the 31st should everything work out and a settlement is reached? I'm worried I show up on the 31st and they just decide to squat and let the eviction process play out.

2 Reply

Ronan M.Pro Member

Rental Property Investor · Chicago, IL · Member since 2015 · 352 posts · 281 votes

9y

Ouch. Then you did play a part in this unfortunately. But still, if you rectified it quickly then there is no real basis for their Security Deposit demands. Its not related to the power being cut. I don't believe they have enough proof yet to go after you with a lawyer on the SD issue. But unfortunately the lawyer will know to throw the book at you in the hope that one or two violations stick or you settle. Good luck with this. Don't let it get to you. we have all made mistakes. Learn from this and do everything by the book going forward. Let us know how it works out.

0 Reply

Andreas W.

Durham, NC · Member since 2013 · 502 posts · 215 votes

9y

@Stewart McMillan

I am still curious. How did it come out that you didn't keep the SD in a separate account?

0 Reply

Lumi Ispas

Real Estate Consultant · Chicago, IL · Member since 2014 · 720 posts · 439 votes

9y

@Stewart McMillan , the only advice is to wait with a cashier check at the door on the 31st, a letter from your attorney that clearly states they can't come after you any longer and a new lock for the door. Also, make sure you are adding the interest for the security deposit.

Here is the Chicago Landlord -Tenant Ordinance and the Summary to make sure you are calculating the interest correctly, and make sure you calculate it until the end of May!

For your future reference, every year you make sure you send your tenants the new Landlord - Tenant Summary and pay them before the 12 months are up the interest for that year. For every tenant that stays longer than a year, every year, before the annual anniversary send out the check for the few dollars as that's what the law states.

Read the Summary below, it's only three pages and keep it handy for your reference every time you have an issue with a tenant! Good luck!

https://www.cityofchicago.org/city/en/depts/dcd/su...

1 Reply

Cody L.

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

9y

This sounds terrible. The more liberal the city, the more landlord unfriendly they are (and, ironically, the worse they are for cash flow). Add these types of stories as to why I don't invest in California.

1 Reply

Stewart McMillan

OP

Investor · Chicago, IL · Member since 2016 · 28 posts · 11 votes

9y

Originally posted by @Andreas W.:

@Stewart McMillan

I am still curious. How did it come out that you didn't keep the SD in a separate account?

I can only speculate, but I imagine their attorney just asked them if I had followed CRLTO's guidelines for security deposits.

It seems like when you google anything involving security deposits in Chicago, the top results are law offices that essentially coach tenants on how to go after their 2x security deposit penalty.

My tenants said they wanted to treat their security deposit as May rent. I said they can't do that. They probably googled "security deposit chicago", read a few of the results, then the light bulb goes off.

0 Reply

Brett Jones

Investor · Ellsworth, ME · Member since 2016 · 51 posts · 26 votes

9y

Eat the loss. Chalk it up to "education. Get those tenants out as quickly *** possible, before they cost you more money.

1 Reply

Stewart McMillan

OP

Investor · Chicago, IL · Member since 2016 · 28 posts · 11 votes

9y

Thanks @Lumi Ispas, they responded with an offer for $3k, but the attorney was unwilling to add language regarding the condition of the unit, i.e. they won't guarantee there isn't damage beyond normal wear and tear.

Additionally, one thing that's been bothering me, and I'm interested to hear Chicagoans' takes on this, is that technically these tenants have not terminated their lease. The RLTO states:

The tenants sent a notice of intent to vacate 24 hours after they notified me of the power outage. According the RLTO section above, this was too early. Additionally, the language in their letter made no mention of termination of lease, only that they would be leaving the apt on 5/31. They have not sent me any formal termination of the lease, so technically the lease is still active, correct?

If the lease hasn't expired, then what gives them the right to pursue their security deposit? Granted, I did not hold funds in a separate account, but it appears that's a moot point if I return the security deposit in a timely manner with interest. See RLTO section below.

I'm taking "subject to correcting a deficient amount of interest paid" to mean "in the event that the landlord doesn't return the deposit with enough interest".

I think it's easy to pile on and focus on the obvious errors I've made, but it seems the tenants made some errors as well. Also keep in mind that I offered to put tenants up in hotel, pay for groceries, etc. The unit's heating is forced air, so they had heat. By all indications they stayed in the unit, but I was still happy to reimburse them for more than prorated rent because I was appalled at my mistake.

@Brie Schmidt and @Jeff Burdick please poke holes in my RLTO argument, I've been spending too much time on this and wouldn't mind just settling, but I wonder if I can, at the very least, negotiate down further after citing these mistakes to the attorney and the tenants.

Thanks @Ronan M., your earlier post motivated me to do some more homework on this.

0 Reply

Nicholas W.

Investor · Germantown, WI · Member since 2012 · 206 posts · 364 votes

9y

Originally posted by @Stewart McMillan: