A new unfurnished apartment lease form was recently introduced by the Chicago Association of Realtors.  It includes disclosure forms for tenants to acknowledge they've been informed about lead paint, radon, and bedbugs.  It also sports a new cover page that warns landlords about the risks of accepting security deposits.

According to the Chicago Tribune, this is the first time that the association is advising Chicago landlords to stop requiring security deposits.

The issue at hand has to do with the Chicago Residential Landlord and Tenant Ordinance.  Landlords feel that this document extensively protects renter's rights.  Under the city's ordinance, landlords are required to pay interest each year on security deposits (or unpaid rent) that is held for at least 6 months.  The city sets their annual interest rate, and for 2014, it comes in at 0.013%.

Upon the tenant move out, the landlord must additionally provide an itemized list of damages within the unit within 30 days of the move out.   The landlord must also return the security deposit (with the accumulated interest), after subtracting unpaid rent and damage expenses, within 45 days of the move out day.

If the landlord fails to comply with ANY of the ordinance's provisions, the tenant can be awarded damages that are equal to two times the deposit PLUS interest, attorney fees, and court costs.

In other words, if any lawsuit ensues, the expenses could be rather severe.

While the association acknowledges that deciding to not include a security deposit could put a landlord in the position of acquiring damage costs after their tenant moves out, they believe these expenses will not typically be as costly as a lawsuit.

President of the local Realtors association Matt Farrell commented that the association was "[...] starting to feel like our members were at risk. We haven't been able to change the [ordinance] yet, so we're taking steps to protect [landlords]."

Many landlords are choosing to instate move-in or administrative fees in place of a security deposit to avoid the liability.  Ultimately, landlords should consult with an attorney before making this decision.

Thinking of becoming a landlord?  Already a landlord but thinking of changing your current procedure?  Don't hesitate to send us an email or a call, and we'll be happy to discuss your situation.

Guest author Randy Weinstein has been a licensed attorney focused on real estate since 2006. Randy has been recognized by Superlawyers magazine as a rising star for the past two years.

Randy Weinstein graduated from the University of Denver with a juris doctorate and a masters of science in real estate and construction management. 
Contact Randy at his website http://weinsteinlegal.com or by email This email address is being protected from spambots. You need JavaScript enabled to view it..

 

Homeowners in Chicago who are looking to purchase a new home and rent out their current home must take proper precautions to be cash flow positive.

Changing Your Mindset - Becoming a Business Owner

The first thing that people must understand when they go from living in their home to renting out their home is that they are going from home-owners to business-owners.  By turning your home into your business, you must take the same precautions that you would take in starting any other business.  People should be prepared to consider:

  1. Properly forming an Illinois Limited Liability Company (LLC) 
  2. Executing a Quit Claim Deed from themselves personally into an Illinois Limited Liability Company
  3. Hiring a real estate broker to obtain qualified tenants 
  4. Engaging a real estate attorney to review and/or draft your lease
  5. Consider a property management company to handle repair issues and rent collection. 


Steps 3-5 are particularly important for properties located in the City of Chicago and Evanston. This is because these municipalities have strict Residential Landlord Tenant Ordinances (RLTO) to protect tenants.


Many consumers are missing out on genuine opportunities, as they aren't aware of the benefits of these 2 lesser-discussed mortgage products: Reverse Mortgages and FHA 203K Loans.

While these mortgage types may have had somewhat of a bad rap, they actually can be highly beneficial for a variety of clients with different backgrounds, when taken on with a bit of knowledge and care.  Here is what you should consider.

Reverse Mortgages

Reverse mortgages are beneficial typically to homeowners who have substantial equity in the home and are without other primary sources of income.  Aging homeowners typically find this type of mortgage suitable to their situation.  Here are some of the reasons why you may want to look into a reverse mortgage:
  • Seniors over the age of 62 have the ability to use a reverse mortgage to access the equity of their current residence AND to purchase a new home (in most US states)
  • Older adults, particularly in their 80s and 90s, are taking advantage of the market and are liquidating their primary residence in order to seek out senior living communities, making a reverse mortgage a great option for these homeowners

The International Consumer Electric Show (CES) generated a lot of buzz this year due to one new specific category: home automation, and one specific product line: smart light bulbs.  These fancy bulbs respond to your smartphone while you're away on vacation, sense your presence as you walk in the door, can let you know if you're getting a phone call... oh, and can have an energy life of over 20 years. 

Smart bulbs can, obviously, be great for a homeowner, but real estate agents are intrigued about these developments themselves.  No need to worry about showing up to a home early to turn all the lights on for an inviting entrance.  Also, set the mood with the lightbulbs individually, with a spotlight here and there or a warm ambiance there.

So, what are some specs of smart light bulbs?  

Here are the tasks they can do so far:

  • Connect to your Wi-Fi/Respond to your smartphone or tablet apps - and have control of them from remote locations
  • Have mood settings like "concentrate," "read," or "relax"
  • Displays a range of different colors to respond to mood and setting
  • Can be set to dim automatically as you fall asleep
  • Can sense your presence from up to 50ft away and respond to you
  • Flash to alert you to an incoming phone call
  • Sustain energy for 20 years

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