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.
Wednesday, February 11, 2009
Friday, January 25, 2008
Exclusions from CRLTO
The City of Chicago Residential Landlord Tenant Ordinance strictly governs the conduct of most landlords within the City of Chicago. Nearly all rental property within the City limits is regulated by the CRLTO. Some rental units, however, are not covered by the strictures of the Ordinance.
In fact, Section 5-12-010 provides in part that the CRLTO "...applies to, regulates and determines rights. obligations and remedies under every rental agreement entered into or to be performed after the effective date of is chapter for a dwelling unit located within the City of Chicago, regardless of where the unit is made, subject only to the limitations contained in Section 5-12-020".
Section 5-12-020 of the Chicago Residential Landlord Tenant Ordinance sets forth the various exclusions from coverage of the ordinance. The most common exclusion from coverage arises under 5-12-020(a) of the CRLTO in situations where a building both (1) contains six or fewer units and (2) the landlord resides in the building. Even when the ordinance does not apply in the case of owner occupied buildings of six units or less, the provisions of Section 5-12-160 continue to apply.
Unfortunately for many condominium owners throughout the City of Chicago, the test for exclusion under 5-12-020(a) is a two part test. As a result, if a condominium owner owns a single unit in a four unit condominium building but does not also reside in the building, that condominium is governed by the CRLTO. Similarly, a single family home in the City of Chicago that is leased out is also governed by the CRLTO. Many landlords are surprised to find that their tenancies are governed by the ordinance. Usually, when they find out, it is too late.
The remainder of the exclusions in 5-12-020(b)-(f) provide for exemptions for various hotels, hospitals, purchasers of real estate who allow a seller to retain temporary possession, employee housing, and co-op property occupied by the co-op shareholder under the proprietary lease. The exclusions are quite limited and specific, with many being defined elsewhere in the City of Chicago code.
In fact, Section 5-12-010 provides in part that the CRLTO "...applies to, regulates and determines rights. obligations and remedies under every rental agreement entered into or to be performed after the effective date of is chapter for a dwelling unit located within the City of Chicago, regardless of where the unit is made, subject only to the limitations contained in Section 5-12-020".
Section 5-12-020 of the Chicago Residential Landlord Tenant Ordinance sets forth the various exclusions from coverage of the ordinance. The most common exclusion from coverage arises under 5-12-020(a) of the CRLTO in situations where a building both (1) contains six or fewer units and (2) the landlord resides in the building. Even when the ordinance does not apply in the case of owner occupied buildings of six units or less, the provisions of Section 5-12-160 continue to apply.
Unfortunately for many condominium owners throughout the City of Chicago, the test for exclusion under 5-12-020(a) is a two part test. As a result, if a condominium owner owns a single unit in a four unit condominium building but does not also reside in the building, that condominium is governed by the CRLTO. Similarly, a single family home in the City of Chicago that is leased out is also governed by the CRLTO. Many landlords are surprised to find that their tenancies are governed by the ordinance. Usually, when they find out, it is too late.
The remainder of the exclusions in 5-12-020(b)-(f) provide for exemptions for various hotels, hospitals, purchasers of real estate who allow a seller to retain temporary possession, employee housing, and co-op property occupied by the co-op shareholder under the proprietary lease. The exclusions are quite limited and specific, with many being defined elsewhere in the City of Chicago code.
Wednesday, January 9, 2008
Relief for Tenants when Landlord is Being Foreclosed
Effective January 1, 2008, the State of Illinois has enacted Public Act 095-0262 amending 735 ILCS 5/15-1701 of the Code of Civil Procedure to allow tenants a right of possession during a foreclosure. Under the old law, tenants could be evicted shortly after the entry of an order for possession in the foreclosure action.
Under the new law, in the case of a foreclosure where a tenant is current on his or her rent, an order for possession entered in a supplemental petition for possession in the foreclosure must allow the tenant to retain possession of the property covered by the tenant's rental agreement for the shorter of: (1) 120 days following the notice of the hearing that has been properly served upon the tenant or (2) through the duration of the tenant's lease.
As a result, tenants will have at least the balance of their lease if less than 4 months remain or up to 4 months after they receive notice that their landlord is in foreclosure. Tenants will still have to pay their rent. The law provides the additional right to possession only if the tenant continues to pay rent in full during the 120 day period. In addition, the right only extends to a case of "foreclosure where the tenant is current on his or her rent". This can lead to a few questions.
Who is entitled to rent during the pendancy of the foreclosure action? Is it the landlord, the mortgage holder foreclosing the loan, or the court appointed receiver? Generally, payment should be made to the landlord. However, many landlords in arrears refuse to accept rental payments. In such a case, the tenant should be careful to tender the rent payment to the landlord. If the payment is denied, the tenant should tender the rent payment to the court appointed receiver and/or mortgage holder. In either case, the tenant should get a receipt for payment! If neither the court appointed receiver/mortgage holder or the landlord will accept the rent, the tenant should appear in court and attmept to have the court order one of the parties to the suit to accept the rent.
Under the new law, in the case of a foreclosure where a tenant is current on his or her rent, an order for possession entered in a supplemental petition for possession in the foreclosure must allow the tenant to retain possession of the property covered by the tenant's rental agreement for the shorter of: (1) 120 days following the notice of the hearing that has been properly served upon the tenant or (2) through the duration of the tenant's lease.
As a result, tenants will have at least the balance of their lease if less than 4 months remain or up to 4 months after they receive notice that their landlord is in foreclosure. Tenants will still have to pay their rent. The law provides the additional right to possession only if the tenant continues to pay rent in full during the 120 day period. In addition, the right only extends to a case of "foreclosure where the tenant is current on his or her rent". This can lead to a few questions.
Who is entitled to rent during the pendancy of the foreclosure action? Is it the landlord, the mortgage holder foreclosing the loan, or the court appointed receiver? Generally, payment should be made to the landlord. However, many landlords in arrears refuse to accept rental payments. In such a case, the tenant should be careful to tender the rent payment to the landlord. If the payment is denied, the tenant should tender the rent payment to the court appointed receiver and/or mortgage holder. In either case, the tenant should get a receipt for payment! If neither the court appointed receiver/mortgage holder or the landlord will accept the rent, the tenant should appear in court and attmept to have the court order one of the parties to the suit to accept the rent.
Thursday, December 13, 2007
Changes at the Chicago Water Department affect home sales in Chicago
On November 12, 2007, the Chicago City Council passed a number of amendments to the Municipal Code of Chicago that affect the City of Chicago Water Department and real estate transactions in the City of Chicago.
It is expected that, beginning December 17, 2007, the City of Chicago will increase double price charged to obtain a "Full Payment Certificate" also known as a "Water Certification" from $25 to $50. (See changes to 11-12-530)
In addition to the fee increase, the City has reinstated the requirement that a "Full Payment Certificate" be obtained for condominium property. In addition to the normal requirements for obtaining an FPC, a condominium request must also include a paid assessment letter current for the month of closing that includes the condominium unit number, the condominium assoication water account number, the name of the condominium unit owner, a statement from the association that the condominium association pays the water bill, and a statement from the association that the to be conveyed unit's monthly assessments are paid in full and up to date. (See changes to 11-12-531)
If the City needed more money, they should have just imposed a new tax on the sale of real property. Instead, they increased the bureacratic workload by forcing hundreds more people to stand in line to obtain FPCs for condominium units where the association already pays the water bill.
It is expected that, beginning December 17, 2007, the City of Chicago will increase double price charged to obtain a "Full Payment Certificate" also known as a "Water Certification" from $25 to $50. (See changes to 11-12-530)
In addition to the fee increase, the City has reinstated the requirement that a "Full Payment Certificate" be obtained for condominium property. In addition to the normal requirements for obtaining an FPC, a condominium request must also include a paid assessment letter current for the month of closing that includes the condominium unit number, the condominium assoication water account number, the name of the condominium unit owner, a statement from the association that the condominium association pays the water bill, and a statement from the association that the to be conveyed unit's monthly assessments are paid in full and up to date. (See changes to 11-12-531)
The alleged policy behind the FPC is that the City is given a final chance to make a seller pay their water account in full before being allowed to sell property and flee the city. Is this really necessary for condominiums where the association is responsible for payment of the water bill?
So what does this mean to sellers of property in the City? Increased fees and more hassles. Condominium Sellers who will be selling early in any given month will need to pre-pay their assessments so that they can timely obtain a paid assessment letter that conforms to the City's requirements. The new law will also likely cause a major disruption in obtaining FPCs.If the City needed more money, they should have just imposed a new tax on the sale of real property. Instead, they increased the bureacratic workload by forcing hundreds more people to stand in line to obtain FPCs for condominium units where the association already pays the water bill.
Friday, October 12, 2007
Do we need to get a C.L.U.E.?
All real estate buyers will be required by their lender (and good sense) to obtain hazard insurance. In most cases, the insurance is an afterthought, but maybe it should not be. The Multi-Board 4.0 Real Estate Contract contains a provision that allows a buyer to check with an insurance agent to determine if the property being purchased can qualify for form HO-3 hazard insurance at "preferred permium rates" and provides an out from the contract if that detemination is made and timely notice provided to the seller.
When underwriting a homeowner's policy, insurance companies usually review claims information and can deny coverage to a potential buyer based upon prior claims at the property address. In such a situation, a buyer will be forced to purchase "non-standard" coverage or coverage through the government, usually at extremely high premium rates.
In any event, in order to make a determination about policy availability at preferred rates, Buyers need to get involved with an insurance agent much earlier in the buying process. Generally, the insurance agent will order up a "C.L.U.E. report". C.L.U.E. stands for "Comprehensive Loss Underwriting Exchange" which is basically a database that tracks prior claims against a property. The company that runes C.LU.E. currently indicates that the report has information about the most recent seven years of claims activity.
This information can be interesting potential buyers and may be a valuable resource when purchasing a home. A Seller can now obtain a version of a C.L.U.E report stripped of personal information (such as social security numbers) for their buyers for about $20. The information contained there can be valuable to prevent the purchase of a lemon or to provide piece of mind to a buyer that there is not a history of problems at a particular property. In any event, insurance inquiries must be made earlier in the process.
When underwriting a homeowner's policy, insurance companies usually review claims information and can deny coverage to a potential buyer based upon prior claims at the property address. In such a situation, a buyer will be forced to purchase "non-standard" coverage or coverage through the government, usually at extremely high premium rates.
In any event, in order to make a determination about policy availability at preferred rates, Buyers need to get involved with an insurance agent much earlier in the buying process. Generally, the insurance agent will order up a "C.L.U.E. report". C.L.U.E. stands for "Comprehensive Loss Underwriting Exchange" which is basically a database that tracks prior claims against a property. The company that runes C.LU.E. currently indicates that the report has information about the most recent seven years of claims activity.
This information can be interesting potential buyers and may be a valuable resource when purchasing a home. A Seller can now obtain a version of a C.L.U.E report stripped of personal information (such as social security numbers) for their buyers for about $20. The information contained there can be valuable to prevent the purchase of a lemon or to provide piece of mind to a buyer that there is not a history of problems at a particular property. In any event, insurance inquiries must be made earlier in the process.
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