Interest on Security Deposit
In this guide, you'll learn when to pay interest on security deposits.
Not all Landlords are required to pay interest on security deposits (unless you're in Chicago). The rules depend on the number of units (defined as single building or a complex of buildings located on contiguous parcels of real property):
- Interest Required (25+ units): When a Landlord leases a unit in a building that contains 25 or more units, then the Landlord must pay interest to the Tenant on the Security Deposit if the security deposit is held for more than 6 months.
- Interest NOT Required (24- units): Interest on Security Deposits is not required where the leased property is a unit with less than 25 units (ex. single family residences, duplexes, etc.).
Interest is "computed from the date of the deposit at a rate equal to the interest paid by the largest commercial bank, as measured by total assets, having its main banking premises in this State on minimum deposit passbook savings accounts as of December 31 of the calendar year immediately preceding the inception of the rental agreement on any deposit held by the lessor for more than 6 months." Need some help? Reach out.
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When an interest payment is due
Within 30 days after the end of each 12 month rental period, the Landlord shall pay the Tenant any interest that has accumulated to an amount of $5 or more, by cash or credit to be applied to rent due, except when the Tenant is in default under the terms of the lease. The Landlord shall pay all interest that has accumulated and remains unpaid, regardless of the amount, upon termination of the tenancy.
Liability for non-payment of interest
If you willfully fail or refuse to pay the interest at the time provided shall be liable for an amount equal to the security deposit, together with court costs and reasonable attorneys fees.
What about Chicago? Every Landlord pays interest on security deposits in Chicago.
Security Deposit Interest Act - 765 ILCS 715/
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This article is for general information purposes only and should not be considered legal advice or legal opinion on any specific case and/or circumstance. This article does not create an attorney/client relationship. No guarantee for accuracy, completeness, or changes in the law. The choice of a lawyer is an important decision and should be based solely on advertisements.