Security Deposit Basics
In this guide, you'll learn how to avoid common problems Landlords make with security deposits.
A security deposit is money paid from a Tenant to a Landlord as a "safety net" to ensure Tenant compliance with the Lease. These are refundable to the Tenant after permitted costs and expenses are deducted after the Tenant moves out.
How much can you charge for a security deposit?
Illinois does not limit the maximum amount of a security deposit. Common practice is to require one month's rent as a security deposit, paid to Landlord when the Tenant moves into the property. Local laws may cap the security deposit, check with your local officials.
Where can you hold the security deposit?
Generally speaking, there are no requirements on where to hold the deposit (ex. a separate bank account) if there are less than 25 units. Local laws may require a separate bank account. Either way, it's wise to deposit the funds into an FDIC insured account.
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Reasons to keep the security deposit
Generally, you can deduct the for these:
- unpaid rent;
- damage to the property (make sure not pre-existing or reasonable wear and tear);
- specific charges in the Lease.
If you keep any portion of the security deposit, then you must provide a Notice of Security Deposit withholding to the Tenant within thirty days.
Can a Tenant apply the security deposit to last month's rent? Check your lease (our lease doesn't allow it). There's no "right" for a Tenant to do this in Illinois. But if you chose to let this happen, make sure you've inspected the property for damages first. The odds of you collecting more money for damages (if you've burned through the security deposit) aren't likely.
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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.