What interest rate should a Chicago landlord use? That depends!

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!