Can landlords charge non-refundable security deposits?
This rental guidance was reviewed by the Tenants & Landlords Intelligence Team, specializing in lease agreements, notices, rent disputes, deposits, evictions, and tenant-landlord operational procedures.
Understanding Security Deposits in Illinois: Can Landlords Charge Non-Refundable Fees?
When renting a home or apartment in Illinois, tenants often encounter security deposits as part of the leasing process. Understanding the rules governing these deposits is crucial for renters to protect their rights and avoid unnecessary charges. One common question among Illinois tenants is whether landlords can charge non-refundable security deposits.
Security Deposits in Illinois: The Basics
Under Illinois law, security deposits serve the purpose of protecting landlords against unpaid rent, damage beyond normal wear and tear, or other breaches of the lease agreement. While landlords are permitted to require security deposits, the Illinois Security Deposit Return Act and other relevant statutes regulate how these deposits must be handled.
Can a Security Deposit Be Non-Refundable?
In Illinois, the general rule is that security deposits must be refundable. The law expressly governs the return of these deposits after the tenant vacates the property, indicating an expectation that the deposit is intended to cover potential damages or unpaid charges rather than serve as an upfront, non-refundable fee.
- Non-refundable fees disguised as security deposits are not allowed: Landlords cannot label an amount as a "security deposit" and then refuse to refund it regardless of the property's condition.
- Pet fees or application fees may be non-refundable: It is important to distinguish security deposits from other types of fees, such as pet deposits (which might sometimes be non-refundable, but often are still considered deposits with refund conditions) or application fees (which are usually non-refundable and separate from the security deposit).
Illinois Laws Governing Security Deposits
Maximum Amount
Illinois law limits the amount landlords can charge as a security deposit depending on the rental term:
- Up to one and a half months’ rent (1.5 times the monthly rent) for leases shorter than one year.
- Up to two months’ rent (2 times the monthly rent) for leases lasting one year or longer.
Return of Security Deposits
Illinois requires landlords to return the security deposit within 45 days after the tenant vacates the unit. Along with the deposit return, landlords must provide an itemized list of any deductions made for unpaid rent, damage, or other legitimate charges.
- If the landlord withholds any portion of the deposit, they must clearly specify the reasons in writing.
- Failure to comply with return requirements may entitle tenants to damages.
Interest on Security Deposits
In some Illinois municipalities, such as Chicago, landlords must pay interest on security deposits held for a certain time period. Statewide, however, there is generally no statutory requirement to pay interest unless specifically stated in the lease agreement.
What Tenants Should Know About Non-Refundable Security Deposits
Since security deposits in Illinois are required to be refundable, any claim by a landlord that a security deposit is non-refundable should raise caution.
- Review the lease carefully: Terms describing any “non-refundable security deposit” may contradict Illinois law and could be challenged.
- Consult local ordinances: Some cities may have additional tenant protections concerning security deposits.
- Differentiate fees from deposits: Landlords may charge non-refundable application fees or pet fees, but these are distinct from security deposits.
- Document the condition of the unit: To protect the right to a refund, tenants should photograph the property at move-in and move-out.
Practical Tips for Illinois Tenants Regarding Security Deposits
- Confirm the classification: Ensure that any upfront fees labeled as a security deposit are, in fact, refundable.
- Get the security deposit receipt: Always request a written receipt specifying the amount, date, and purpose of the payment.
- Know your rights if denied a refund: Tenants can demand an itemized statement of deductions within 45 days of moving out. If the landlord does not comply, legal action may be warranted.
- Communicate in writing: Keep written communication about security deposits and related charges to provide a paper trail.
Summary
In Illinois, landlords cannot legally charge non-refundable security deposits. Security deposits must be handled as refundable funds intended to secure tenant obligations and are subject to specific maximum limits and strict timelines for return after tenancy ends. Other fees, such as application or pet fees, may be non-refundable, but these are distinct from security deposits.
Tenants in Illinois should carefully review lease agreements, clarify any confusing terms related to security deposits, and understand their rights to recover deposits and dispute improper charges. Awareness of the state laws governing security deposits empowers tenants to enter rental agreements confidently and protect themselves against unfair rental practices.