Chicago / Housing guide

Chicago Landlord Obligations: The RLTO Requirements and What They Cost to Miss

Homzora editorial team · Updated October 5, 2026

The Chicago Residential Landlord and Tenant Ordinance requires a landlord to pay a tenant twenty cents a year in interest on a two thousand dollar deposit. Failing to pay it can cost twice the deposit plus attorney fees.

That asymmetry runs through the whole ordinance. The obligations are small and procedural. The consequences of missing them are not.

This guide sets out what the RLTO requires, which buildings it covers, and where the expensive mistakes sit.

Whether the ordinance applies to your building

Start here, because it determines everything else.

The RLTO covers most rental housing inside Chicago city limits. The principal exception is an owner occupied building of six units or fewer, which falls outside the main body of the ordinance.

That exception is narrower than it sounds in one respect. The Fair Notice provisions at section 5-12-130 do apply to owner occupied buildings of six units or fewer, even though the wider ordinance does not. The right to cure does not extend to them.

And a building just outside the city limits is a different question again. Cook County and Evanston operate their own ordinances with different requirements, so a property a short distance away may sit under an entirely separate set of rules.

At the point you take a deposit

Three obligations attach immediately or nearly so.

A receipt. Stating the owner name, the date received and a description of the dwelling unit.

The Security Deposit Interest Rate Summary. This must be attached as an addendum to the lease and to every renewal where a deposit is held. It is updated each January when the City Comptroller announces the new rate.

Escrow. The deposit goes into a federally insured interest bearing account in a state or federally chartered institution in Illinois, held separately from your own funds.

Courts have held the rate summary is not required where no deposit is taken. Where one is taken, omitting it is a compliance failure independent of whether the interest itself was ever paid.

The interest obligation

A landlord holding a deposit for more than six months must pay the tenant interest each year, at the rate the City Comptroller sets.

The Comptroller calculates it on the first business day of each January, from the average of savings, insured money market and six month certificate of deposit rates at the commercial bank with the most branches in Chicago. For 2026 the figure is 0.01 percent.

Interest must be paid, or credited against rent, within thirty days of the end of each twelve month rental period.

The rate has been 0.01 percent every year since 2015. Before July 1997 it was 5 percent. On a two thousand dollar deposit that is the difference between twenty cents a year and a hundred dollars, and it reflects what happened to bank deposit rates rather than any change in the ordinance.

What has not changed is the penalty for ignoring it.

Returning the deposit

Two deadlines, and the tighter one is the one landlords more often miss.

The deposit and any interest owed must be returned within forty five days of the date the tenant vacates, less unpaid rent and expenses for damages.

But before deducting anything for damages, an itemized statement of those damages must reach the tenant within thirty days of the date they vacate.

So a landlord intending to deduct has to act well before the forty five days expire. A deduction made at day forty four, with no itemization sent by day thirty, has no basis regardless of whether the damage was real.

Where the tenancy ends because of fire damage, the return period drops to seven days from the tenant notice of termination.

What getting it wrong costs

A landlord who violates the security deposit provisions may be liable for twice the amount of the deposit plus attorney fees.

That is the figure that makes the twenty cent interest obligation worth taking seriously. The obligation is trivial in dollars. The exposure attached to it is four figures.

And the violations that trigger it are procedural rather than substantive. Missing the rate summary addendum. Failing to pay interest. Missing the thirty day itemization. None of those require bad faith or an unreasonable deduction. They require a missed date.

Notice before ending a tenancy or raising rent

Chicago scales notice to tenancy length, and the tiers are longer than almost anywhere in the country.

Thirty days where the tenancy is under six months. Sixty days from six months to three years. One hundred and twenty days beyond three years.

The same tiers govern both a non renewal and a rent increase, and there is no minimum threshold. A twenty five dollar increase requires the same notice as a five hundred dollar one.

Tenancy length counts total time in the unit regardless of transitions between lease types. Two years on a written lease followed by fourteen months month to month is a tenancy of three years and two months, which puts it in the one hundred and twenty day tier.

And where notice is short, the required period runs from the date notice was actually given rather than from the lease termination date. A thirty day notice served on a four year tenant does not become valid on day thirty one. It becomes a one hundred and twenty day period starting from service.

What Illinois does not let the city do

Illinois preempted rent control in 1997. No unit of local government may enact an ordinance controlling the amount of rent charged for private residential property.

So Chicago can require four months notice of an increase and cannot limit its size. What governs the amount is the lease.

A compliance checklist

• Establish whether the ordinance covers each building, and remember Fair Notice applies even where the rest does not.
• Issue a receipt at collection, not afterward.
• Attach the rate summary to every lease and renewal where a deposit is held, and reissue it each January.
• Hold deposits in a separate interest bearing account in Illinois.
• Diary each tenancy anniversary and pay interest within thirty days of it.
• On a move out, work backward from day thirty for the itemization, not from day forty five.
• Calculate notice from total occupancy, not the current lease term.

The short version

Receipt at collection, rate summary attached to every lease and renewal, deposit in separate escrow, interest within thirty days of each anniversary, itemization within thirty days of vacating and the balance within forty five. Notice at thirty, sixty or one hundred and twenty days by tenancy length, for both non renewal and any increase.

Twice the deposit plus attorney fees for a violation, and the violations are procedural rather than substantive.

The full ordinance reference, with every provision cited, is free to download at our Chicago datasets.

Not legal advice. This page summarizes published provisions of the Chicago Residential Landlord and Tenant Ordinance and Illinois law as of September 2026, and does not evaluate any particular tenancy or portfolio. Cook County and Evanston operate separate ordinances with different requirements. Consult an attorney before relying on any of it.

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