There is a new twist on security deposit interest this year. The Section 5-12-080 of the CRLTO requires Chicago landlords with rentals covered by the ordinance to pay interest on security deposits at the rate set by the City (the same applies to Evanston). That rate, for 2009, is 0.12%.
In addition, the State of Illinois also has a law that applies to interest. The Illinois Security Deposit Interest Act is applicable to all landlords of residential real property containing twenty five (25) or more units in a single building or a complex of contiguous parcels. That interest rate, for 2009, is 0.25%.
As a result, a Chicago (or Evanston) landlord, covered by the Illinois Security Deposit Interest Act (ie. one with 25 or more units) must actually pay the State of Illinois rate rather than the Chicago rate! The penalty for violation of the ISDIA is a bit different from the Chicago ordinance, but it is a penalty nonetheless. Don't get caught with this mistake in 2009!
Friday, February 13, 2009
Thursday, February 12, 2009
Be careful how you sign that!
Oftentimes, clients or potential clients bring me a contract or other document after they have signed it. Sometimes, by then, it is too late for me to help the client get out of a jam. I was recently shown a document where a client signed a contract, believing his signature to be on behalf of his corporation, that was signed individually by the client. That is, the client thought he was obligating his company under a contract, but did not sign the document properly and thus, obligated himself personally. As a result, all of the benefits of the typical corporate liability shield are now gone.
How should someone go about signing a contract on behalf of their corporation? Like this:
ABC Widgets, Inc.
(signature)
by: (typed or printed name of person signing above)
its: (officer position of person signing)
Now, the world is on notice that a corporation is on the hook and not the person, individually, who signed the contract. This is part of the "corporate formalities" that are required to take advantage of the corporate liability shield. By signing as suggested, it is clear to the other party and outside third parties that a corporation is on the hook - not the signer. Anytime that all of the elements of a corporate signature are missing (ie. corporation name, signed by officer, position of officer), it is possible that an opposing party could go after the personal assets of the signer - not good!
Similarly, if you wish to obligate another party, make sure you are clear who the other party is. Is it a corporation? an individual? a partnership? The type of entity will make a major difference when it comes time to seek a remedy for breach, but that's another story.
How should someone go about signing a contract on behalf of their corporation? Like this:
ABC Widgets, Inc.
(
by: (typed or printed name of person signing above)
its: (officer position of person signing)
Now, the world is on notice that a corporation is on the hook and not the person, individually, who signed the contract. This is part of the "corporate formalities" that are required to take advantage of the corporate liability shield. By signing as suggested, it is clear to the other party and outside third parties that a corporation is on the hook - not the signer. Anytime that all of the elements of a corporate signature are missing (ie. corporation name, signed by officer, position of officer), it is possible that an opposing party could go after the personal assets of the signer - not good!
Similarly, if you wish to obligate another party, make sure you are clear who the other party is. Is it a corporation? an individual? a partnership? The type of entity will make a major difference when it comes time to seek a remedy for breach, but that's another story.
Wednesday, February 11, 2009
Phonecall of the day!
I just fielded a phonecall from someone who found me on the web wondering "is it okay to take the hinges off of my tenant's door so that they just leave"? Apparently, the caller had already served the tenant with a five day notice and was now ready to engage in self help.
After I gathered my senses at such a question, I quickly remembered that this is exactly the reason why the landlord tenant laws have been slanted so far in favor of tenants. Just to be clear, because it seems to not be obvious to some landlords, there are only two people who can return a rental property to the landlord: (1) the tenant... voluntarily and (2) the sheriff after the landlord has obtained an order for possession from a judge. Other than those two scenarios, changing the locks, removing the door, cutting the electricity, moving someone else in, and any other nonsense that the landlord can think up is a wrongful eviction.
Landlords need to treat their rental business like what it is: a business. That means learning the rules and understanding how to move within the system. That means having a lease that complies with the CRLTO or other applicable laws (depending upon the location of the property).
Evictions cost lots of time and money. Lawsuits from tenants cost money. In these tougher economic times, landlord's can't afford to not do it by the book. They also need to build into their business plan the potential cost of an eviction and the cost of being in compliance with the law.
The Illinois forcible entry and detainer act provides that a tenant who is wrongfully or constructively evicted is entitled to an abatement of rent for the eviction period and also entitled to compensatory damages for any losses that were a result of the wrongful act. It is worse in Chicago. Under 5-12-160 of the CRLTO, a landlord is subject to a daily fine of between $200-$500 plus the tenant has a civil remedy to recover the greater of two months rent or twice the tenants actual damages plus court costs and attorney's fees. Landlords: don't lock out your tenants.
After I gathered my senses at such a question, I quickly remembered that this is exactly the reason why the landlord tenant laws have been slanted so far in favor of tenants. Just to be clear, because it seems to not be obvious to some landlords, there are only two people who can return a rental property to the landlord: (1) the tenant... voluntarily and (2) the sheriff after the landlord has obtained an order for possession from a judge. Other than those two scenarios, changing the locks, removing the door, cutting the electricity, moving someone else in, and any other nonsense that the landlord can think up is a wrongful eviction.
Landlords need to treat their rental business like what it is: a business. That means learning the rules and understanding how to move within the system. That means having a lease that complies with the CRLTO or other applicable laws (depending upon the location of the property).
Evictions cost lots of time and money. Lawsuits from tenants cost money. In these tougher economic times, landlord's can't afford to not do it by the book. They also need to build into their business plan the potential cost of an eviction and the cost of being in compliance with the law.
The Illinois forcible entry and detainer act provides that a tenant who is wrongfully or constructively evicted is entitled to an abatement of rent for the eviction period and also entitled to compensatory damages for any losses that were a result of the wrongful act. It is worse in Chicago. Under 5-12-160 of the CRLTO, a landlord is subject to a daily fine of between $200-$500 plus the tenant has a civil remedy to recover the greater of two months rent or twice the tenants actual damages plus court costs and attorney's fees. Landlords: don't lock out your tenants.
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