Notice for eviction and lease terminations

Yesterday a colleague sent me an email asking for help clarifying the notice his client was required to give a residential tenant.  The tenant had a residential year to year lease in the City of Chicago, and there appeared to be some conflicting notice provisions.  His question centered on whether the Chicago Residential Landlord Tenant Ordinance (CRLTO) or Forcible Entry and Detainer Act (FED) applied. 

Part of the problem lies in the difference between Section 9-205 of the Forcible Act (a/k/a the Illinois eviction statute), which requires 60 days’ notice to terminate a lease; and, the Chicago Residential Landlord Tenant Ordinance (CRLTO) 5-12-130(j), which requires a landlord to give a tenant 30 days’ notice to terminate a lease.  Confused yet?

We were confused too, and this is our job.  Our discussion uncovered that the first problem in interpretation centers on the difference between terminating “for cause” and legally ending a tenants’ lease because you want to do something else with the space.  Reasons a landlord might terminate for “cause” include, of course, not paying rent or violating lease terms.  Other reasons for not renewing a lease might just be that you have a better tenant lined up, or you want to use the space yourself.  The other interpretation problem is deciding which statute controls.

I’ve talked before in this space about the difficulties of being a compliant landlord in the City.  But this is an easy one.  If your property is a residential rental in the City of Chicago, and subject to the RLTO (most are), the CRLTO controls.  If your property is outside the City or not subject to the Ordinance, look to state law.

If you are evicting for cause, such as nonpayment of rent, you must give tenant a notice.  The notice period depends on the cause for eviction (see the relevant statute).  If the notice period expires, and the problem hasn’t been fixed, you must then file an eviction suit under the Forcible Act (FED Statute) and get an order of possession to legally evict. 

If you have a tenant whose lease is ending and you are not renewing, you must simply give them the appropriate notice.  In the City it is 30 days and outside the City it is 60 days.  Once that notice period expires, you need do nothing else.  Hopefully your tenant will vacate peacefully.

Questions?  See: CRLTO (Chapter 5-12 of the Municipal Code of Chicago), the Illinois Landlord Tenant Act (765 ILCS 705) and the Illinois Forcible Entry & Detainer statute (735 ILCS 5/9).  OR

Contact me at: www.scottlawchicago.com

“I’m a First Time Landlord in the City of Chicago…. HELP!!”

“I’m a First Time Landlord in the City of Chicago…. HELP!!”

Recently, a friend hired me to help her navigate the pitfalls of becoming a first time landlord in the City of Chicago.  With the real estate market in its current condition, and so many homeowners outgrowing their homes but being “underwater” in the mortgage and unable to sell, I started thinking there may be many potential first-time landlords out there.  Because our fair City has some of the most tenant friendly laws on the books, I also got to thinking these landlords to be could use some help navigating the potential financial pitfalls awaiting the inexperienced and non-professional landlord.  If you are planning to sublet your unit or get a roommate to share your space, be aware that for legal purposes you become a landlord, and these provisions apply to you too.  I normally try to keep blog posts short, but there’s a lot to cover here, so buckle in for the ride…

Does the CRLTO (“The Ordinance”) Apply to my property?

The Ordinance specifically excludes buildings with six units or less which are also owner-occupied.  There are other exceptions for hotels and work related lodging, but the owner-occupied exception is the most commonly applied.

The Lease

There are three things landlords must attach to the lease.  1) Attach a copy of the CRLTO or a summary; 2) If your building has been cited by the Department of Buildings (DOB) for Municipal Code violations within the last 12 months, you must attach a copy of those as well; and, 3) Finally, include somewhere in the lease contact information for the owner or owner’s agent where a tenant can direct any formal communications or requests.  Building violations can be found online at: https://webapps.cityofchicago.org/buildingviolations/

The Security Deposit Collection and Interest

The security deposit provisions are some of the toughest in the Ordinance, so make sure you understand them completely when renting out your unit.  One small misstep can end up costing you thousands of dollars if you end up with an angry and/or litigious tenant.  1) Hold all security deposit funds in a separate bank account; 2) The bank must be FDIC insured and operate in Illinois; 3) The account must be interest bearing.  4) Collect the deposit in a separate check.  You may collect it in the same check with the first month’s rent IF you put the security deposit portion in your separate account within 5 business days.  The bank name and address where the deposit is held must be stated clearly in the lease agreement.  For this reason, I recommend choosing a bank in advance and if possible opening the account before collecting the deposit so this information can be included in the Lease Agreement.

Last but not least… provide tenant with a written receipt for the deposit, which must include the following items:  Your (Landlord) name, Their (Tenant) name, Date deposit was received, Amount of Deposit and description of unit deposit is paid for (Address).  Interest rates are decided annually by the City of Chicago and can be found on their website each January. The 2013 interest rate is 1.023%.  Even though the interest paid back will likely be miniscule, it MUST be paid back to the tenant every year (if they renew) or at the end of the lease term.  Be sure to fully document  the interest payment, because no matter how small the interest amount is, if you fail to pay it, you can be held liable for two months’ rent no questions asked.  Beware! 

Returning the Deposit

When your Tenant vacates, the deposit must be returned to them within 45 days of move out, subject to certain potential deductions.  If you’re deducting, an itemized list of deductions must be presented to the Tenant within 30 days of move out.  If you make repairs you must include either the actual receipt or a written estimate from a contractor for the specific repair.  Also, landlords can’t deduct for normal wear and tear, which is anything you would normally do the property on a yearly basis to maintain the property.  Good examples of this are repainting or cleaning the carpet.  You may also deduct any unpaid rent from the deposit, but this is only allowed at the end of the lease term, not during the tenancy.

Entry for Repairs or Showings

Except in case of an emergency, Landlords must give Tenant two days’ notice in writing before entering the unit.  Each violation of this, if proven, can cost one month’s rent in a lawsuit.

Landlord’s Responsibility to Maintain Property

As a property owner, you have a duty to maintain a rental unit according to all provisions of the Chicago Municipal Code.  Illinois residential leases are also subject to what is known as the Warranty of Habitability, which in plain English simply means you must maintain the unit in a condition that is reasonably safe and fit for humans to live in.  Whether you do the repairs and maintenance or hire someone to do them for you, the bottom line is, don’t ignore repair and maintenance requests or you may find yourself on the wrong end of a lawsuit.

Notice of Non-Renewal

If, at the end of the initial lease term, you decide not to renew Tenant’s lease for another year, you must give them 30 days written notice of your intent not to renew. 

Prohibited Lease Provisions

Certain types of lease provisions are just flat out prohibited by the Ordinance.  Those provisions are as follows:  Waiver of Tenant rights under the CRLTO; Limitation of Landlord liability under the CRLTO; Waiver of Written Notice of Termination of Tenancy; Late fees in excess of $10.00 of the first $500 of rent + 5%/month for any amount over $500; Early lease termination not by written agreement of both parties.  To put it in plainer terms, the lease cannot contract away any of the tenant’s legal rights under the Ordinance.

Yes, this is a lot of information!  However, I can’t stress strongly enough that you must master these requirements and follow them to letter.  If you have questions on setting up a lease, complying with the CRLTO, Lease Termination or Eviction the assistance of an attorney specializing in this area can help you.  For just a few hours in fees you can save yourself the aggravation and expense of unhappy tenants or litigation. 

If you’re interested in help with handling one of the issues above, please contact me at The Scott Law Office, 312-583-9945, scottemm@gmail.com or www.scottlawchicago.com.

Happy renting!

Where Do I Start With A Landlord Tenant Issue?

In these challenging financial times, many people choose to rent instead of own their residence. For many reasons, this can be a smart financial decision. If you have an issue with a rental situation as a landlord or renter, your remedies depend on where the unit is located, and what type of unit you have. For instance, many of those rentals will be in condominium buildings from owners who are renting out their unit because they wish to move but cannot sell. What many renters of condominium units may not be aware of is that condominium units in Illinois are governed by a different set of laws than apartments and single family homes. Maybe you are in a smaller building renting from an on-site owner. This presents a different situation too.

As a renter or lessor of an apartment or home in the City of Chicago, your first resource is the Chicago Residential Landlord Tenant Ordinance (Chicago Municipal Code Title 5 Chapter 12), known informally as the CRLTO or RLTO. This ordinance applies to any residential rental building except, those that have fewer than six units and which are occupied by the owner. Note that both of those requirements must be met for the building not to be covered by the ordinance. For example, if the building is a three-flat but the owner doesn't live there, it will still be covered by the ordinance. The CRLTO is known for being very tenant friendly, so chances are if you are a tenant having a problem with your landlord your issue will be easily handled by the Ordinance. If you are a landlord, take great care to make sure your lease drafting and security deposit are handled in compliance with the RLTO or you may be subject to fines. The fines here for landlords are steep, so having an attorney review any new lease documents and help you handle the security deposit, is a worthwhile investment in most cases.

What if you are in a building that is not covered by the RLTO? An example of a building in the City of Chicago that will not be covered is a two-unit townhouse where the owner lives in one half, and rents the other half out to you. Of course, if you are renting outside the City obviously it will not be covered. In these situations, Illinois State law controls. The Illinois state Landlord and Tenant Act is found at 765 ILCS 705. Also keep in mind that there may be municipal statutes in your city or township that also determine your rights and remedies. And lastly, how about condominiums? In addition to the applicable municipal or state statute, Condominium dwellers need to be aware of the Illinois Condominium Property Act, which is found in the state statutes at 765 ILCS 605.

Confused yet? There's no need to be. Start by applying any municipal or city code in your area. Where there is no municipal code, defer to the Illinois Landlord and Tenant Act. And if you are renting a condominium or leasing one out, the Condominium Property Act will apply across the board. A link to all the statutes is online at: www.ilga.gov/legislation/ilcs/ilcs2.asp?ChapterID=62. There are also great self-help resources at: www.illinoislegalaid.org. This link is especially helpful in sorting out which laws apply to your situation.

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Who the heck am I? I am a 2006 graduate of The John Marshall Law School in Chicago, Illinois, and have been licensed to practice since 2006. My goal in solo practice is to focus on issues relating to the home and property ownership. I am passionate about helping people stay in the homes they own, and sorting out the legal issues that can arise when they are renting.

What To Do Next When You Get A Foreclosure Summons

By: Emma Scott, Esq.
Owner, The Scott Law Office, Chicago, IL
www.scottlawchicago.com


For what seems like years now, the headlines have been screaming a seemingly endless stream of bad news from the housing and lending crisis. Lenders are evil! Borrowers are lazy and unworthy! Someone has to take the blame! Truthfully, there is enough blame to go around for everyone. But, if you're a homeowner facing a foreclosure summons, you're less worried about blame and more worried about what to do next.

The first feeling when receiving that summons is often one of being overwhelmed and defeated. It's likely you knew this moment was coming; you're at least three months behind in your mortgage payments, after all. But there's something about getting the papers that makes it more real and final. When feeling overwhelmed and defeated it's easy to give up and not see all the options available to you. However, the most important first step in your foreclosure defense is the realization that you have options, and that there is a wealth of information available to help you make decisions. After you take a few deep cleansing breaths, assess the situation as follows:

What is my goal? Do you want to keep the home? This is maybe the most important initial question to ask yourself. It's followed closely by...

Can I afford my goal? Many people would like to keep their home, but a quick financial assessment shows them it's not realistic. Before even talking with a bank about modification or a short sale, make a written budget including all your income and expenses. Be rigorous and honest with yourself. If you can't afford the current payment, chances are you won't be able to afford the modified loan payments, which are likely to be higher.

How do I get to my goal? If you think you may be able to afford a modification, it's time to contact the bank and have them run the numbers. Be proactive and aggressive in dealing with the bank and get everything in writing. Banks are notorious for letting paperwork on these deals fall through the cracks. Do a little internet research on the HAMP (Making Home Affordable) legislation that builds in a number of protections for consumers modifying their mortgage loans.

If you can't realistically afford to hang onto this particular property, realize that you may have options to pay off the loan such as a short sale or deed in lieu of foreclosure. It's possible one of these could help you get out from under the loan and avoid having a foreclosure judgment on your credit report. An attorney can help you sort through these options and exercise them in a timely manner.

And while we're on the subject of attorneys...

Should I hire an attorney or go pro se? As an attorney focused on defending borrowers in foreclosure litigation, you may think my ultimate goal is to convince you to hire me. Yes, I'd love it if you were moved by this article to call me and get an analysis of your foreclosure case.

But, there are situations where an attorney is called for, and those where it is not. If you don't want to keep the property, and you don't have a defense to the litigation (a topic for another blog post), you're throwing good money after bad by hiring an attorney to represent you. In this situation there are many good free resources on how to file the appropriate paperwork on your own. A good place to start is http://www.illinoisprobono.org/index.cfm?fuseaction=home.dsp_Content&contentID=1640.

Finally...Don't Panic. I realize this may be the most dire situation you've faced in your life, and that not panicking is easier said than done. If you're not sure whether to get an attorney, and you need support, enlist a trusted business-savvy friend to help you sort through the options. Whatever happens, ignoring the situation is NOT the solution. Dealing with the situation head on will leave you feeling more empowered, and put you in charge of your options.