City of Chicago Sets 2011 Security Deposit Interest Rate

The City of Chicago City Comptroller, Steven J. Lux, has released the security deposit interest rate for the coming year.  The rate is determined by the City Comptroller based upon the average rates of interest as of 12-31-10 of a number of types of Chase Bank accounts.

The rate to be applied pursuant to 5-12-080 of the Chicago Residential Landlord Tenant Ordinance for leases governed by the periods from January 1, 2011 through December 31, 2011 is 0.073 percent.

I will publish the State of Illinois rate as soon as I learn it.  Keep in mind, last year the State of Illinois rate was higher than the City of Chicago rate, so landlords governed by both the City of Chicago and State of Illinois law should have used the State of Illinois rate.

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!