Once again, Illinois has passed an anti-landlord bill that will surely raise rents across the state for the tenants they are trying to protect. The law is House Bill 3564 and changes what a landlord can charge or if they can charge for several different things aimed at stopping rental junk fees. Let's break down how this bill will affect housing providers and what we will no longer be able to charge a tenant for. This bill was sponsored by State Rep. Nabeela Syed and State senator Mike Simmons.
Non-optional fees must now be disclosed on page 1 of the lease.
Once this bill goes into effect January 2027, all new leases must fully disclose any non-optional fees on the first page of the lease agreement this includes, things like rent, pet rent, parking fees, move-in fee, as well as other types of fees such as fines for breaking the lease. This is to promote lease transparency and make sure that tenants are not surprised by any fees hidden on the back pages of the lease. When you are writing a new lease or doing a renewal of a lease agreement, these rental fees all must be on the first page of a lease agreement. If something is listed on subsequent pages in the rental agreement, the tenant is not liable to make those payments.
Late Fee
All late fees in IL are capped at $10 for the first $1000 plus 5% of the remaining rent. for example is rent is between $1 and $1000 the late fee is capped at $10, if the rent is $1200 you would subtract $1000 leaving you with $200 * .05 and then add back your $10 so your late fee would be $20.
Application Fees
All application fees are capped at $50 unless a landlord can show actual costs over $50 and if so they must provide receipts to the tenant and give the tenant 14 days to pay any charges over the $50 initial fee that they are allowed to charge. This means that property owners will most likely have to front money each time they take a rental application and in our opinion this will be hard pressed to get their money back from tenants they reject.
Move-in and Move-out Fee/Security Deposits
A landlord can not charge both a move-in or move-out fee and a security deposit. Furthermore, a security deposit is capped at one month's rent, and the total of all one-time move-in and move-out fees can not exceed actual costs for the move-in. Items must be itemized to show tenants the actual costs associated with them.
So above are the changes and limitations to some of the charges that we have to monitor in new leases, but let's now go into those fees that were part of the fee ban of this new law. The following is a list of fees an Illinois building owner can no longer charge a tenant.
Banned Fees from the New Law
Lease Renewal Fees: You can no longer charge a fee or fine for the modification or renewal of an existing lease agreement.
After-Hours Maintenance Fees: Fees or fines for requesting maintenance service outside of standard business hours are now illegal.
Maintenance Hotline Fees: You cannot charge a tenant for calling a maintenance hotline or using a service to submit maintenance requests and lease questions.
Travel Fees for Repairs: Banned charges include any fee for the travel required for a landlord or technician to complete maintenance or safety repairs.
Pest Abatement Fees: You cannot charge for pest control unless you can prove the tenant specifically contributed to the infestation.
Walkthrough Fees: Charges for conducting an in-person walkthrough at the time of move-in or move-out are prohibited.
Communication Fees: You cannot charge a tenant a fee for contacting the owner or property manager regarding the tenancy or for after-hours requests.
Routine Upkeep Fees: Any fee or fine for the "routine maintenance and upkeep" of the unit is banned.
Bundled Service Fees: Landlords may not charge a "bundled" fee that combines optional services (like cable) with non-optional fees (like trash) into one price.
Notice Fees: You cannot charge a fee for creating or serving a notice of termination (e.g., a 5-day notice) or for filing an eviction action, unless a court specifically grants those costs in an order.
Specific Wording of the Law that Makes it Hard for Bad-actor Landlords
The one thing that our government has caught onto is that landlords and property managers are good at figuring ways around things, so this new law a has a clause that bans any fees that are just rewording of the banned fees, this means just like Chicago has viewed last months rent as a security deposit if it, looks and talks like one of the banned fees above the court may rule that the fee is disallowed.
Major Effects for Illinois Landlords and Enforcement of this New Law
1. I think the rental market will see higher rents in the coming years
2. Tenants will have to file civil lawsuits to get any injunctive relief for landlords not following this new law and there is no specific punitive punishment outlined yet so it may be a while until we see full effect.
3. With that being said, I do see many DIY landlords not using professional property management getting caught up and when it comes time to do an eviction, losing the case because they misapplied a rule from this law.
If you don't want to have to keep up with the insane legal landscape, it's time to do like so many other smaller landlords in IL have done and hire a property management company. We would love to chat and see what money you are leaving on the table. To book a free consultation click here and let's make sure you are in compliance, as well as collecting as much rent as the market will allow you to so you can stay profitable.
