Ald. Matt Martin (47) is pictured at a City Council meeting on June 12, 2024. [Don Vincent/The Daily Line]

A North Side alderperson is pushing for a measure that would change how the city regulates the fees charged to renters when they’re moving into a new apartment. The ordinance is intended to benefit tenants and landlords, respectively, by cracking down on the “outrageous” fees some charge their tenants while also reining in the sometimes cumbersome requirements landlords must follow for security deposits.

The ordinance (O2025-0017572) was introduced by Ald. Matt Martin (47) during last month’s City Council meeting but was sent to the rules committee by Ald. Nick Sposato (38). 

Martin’s proposal would create new definitions in the city code for move-in fees and security deposits, set boundaries around how each may be charged and remove requirements that currently mandate landlords hold security deposits in interest-bearing bank accounts and other related requirements for security deposits. 

“With rents increasing, it’s hard enough to find an affordable place to live,” Martin told The Daily Line. “No one should be expected to pay $1,000 or more in outrageous fees just to move into a place that they can afford.” 

The ordinance would define a move-in fee as “reasonably related” to a landlord's “actual, out of pocket costs for a tenant moving into the dwelling unit,” such as additional security or trash removal costs, according to the legislation. 

That would be different from a security deposit, which the ordinance defines as “funds provided to a landlord to secure payment or performance of a tenant's obligations under a rental agreement, or the obligations of the tenant for their guests or pets,” and must equal no more than one and half month’s rent. 

The 47th Ward alderperson said the ordinance is two-pronged in its approach, limiting the often nonrefundable move-in fees while simultaneously fixing the city’s security deposit regulations, which Martin said are behind a trend away from security deposits and toward move-in fees. 

“Our security deposit system is broken,” Martin said. “There’s a reason why a lot of our landlords, including some of our smallest landlords, are moving away from the security deposit system.” 

Requirements that can sometimes be burdensome in the acceptance and possession of security deposits include the requirement that they be held in an interest-bearing account and that landlords must pay tenants interest on their security deposits at a rate of interest set by the city comptroller.  

According to city code, landlords holding security deposits for over six months must pay accrued interest to a tenant “within 30 days after the end of each 12-month rental period … by cash or credit to be applied to the rent due.” 

Once a tenant moves out, a landlord has 45 days to pay back the remaining balance of the security deposit and any interest after deductions for things such as repairs have been made. 

In addition, landlords have 14 days to notify a tenant when a security deposit has been transferred from one financial institution to another or when the building and its finances have changed hands, and security deposits cannot be “commingled” with the landlord’s other assets, among other requirements.  

Failure to comply with any of these can land a property owner on the hook for serious damages. According to city code, tenants can be entitled to “two times the security deposit plus interest” if the landlord runs afoul of these rules. Additionally, if a landlord miscalculates the amount of interest they must pay to a tenant, they can also be sued and held liable for those damages if they don’t pay the missing interest, plus a $50 penalty, in time.   

“Some of the penalties for noncompliance are quite significant and don’t have any sort of opportunity to cure if you’ve made a good faith mistake,” Martin said.  

As a result, Martin said landlords are swapping out security deposits for nonrefundable move-in fees to avoid the “onerous” requirements, which hurts tenants. Often, Martin said the move-in fees “in no way are tied to the cost of maintaining these buildings.” 

Martin’s ordinance removes the requirements that landlords hold security deposits in interest-bearing accounts and pay annual interest to tenants. It also adds a two-business day cure period for most of the remaining requirements in the security deposit code. 

The only two infractions that would not be covered by that new cure period would be violations of a new rule that caps security deposits at no more than one and half month’s rent and violations of the required timetable to pay back the remaining balance of a security deposit after a tenant moves out. 

But the ordinance also changes how move-in fees are handled. In addition to the new definition, the ordinance states that tenants charged a move-in fee would need to be provided with an “itemized list of the landlord’s reasonable estimate of the costs that comprise” the fee. Further, tenants moving into a place couldn’t be charged for costs “associated with routine maintenance and the upkeep of the premises.” 

With this language, Martin said the ordinance still allows landlords to recoup the actual costs they incur in association with new tenants moving in so long as they can provide evidence. 

But Martin could not exactly say how the city would define a “reasonable” estimate of costs or what counts as “routine” maintenance or “upkeep” in carrying out the proposed law. He said some of the language may be subject to further discussion with stakeholders, or the ordinance would be subject to rulemaking by city departments. 

“We’re still obviously in the early stages of soliciting that feedback, but I think this is a good place to start, and we’ll see if there are some areas where we can tighten up and add clarity,” Martin said.  

The proposal comes after state lawmakers failed to pass a similar measure that would have seen landlords prohibited from charging both a move-in fee and security deposit before the end of their spring session.  

Read more: Bill limiting move-in fees passed Illinois Senate committee, opponents say bill will turn landlords away from state 

The Chicagoland Apartment Association is neither fully supportive nor in opposition to the ordinance. Jon Kozlowski, the organization’s government affairs director, said while the association welcomes the proposed reforms to benefit landlords, it has concerns with some of the provisions related to limiting how fees can be charged. 

“We do welcome the effort to address the overly litigious nature of accepting security deposits,” Kozlowski told The Daily Line.