Are security deposits not making you feel secure anymore?
The city of Chicago has never been confused as a landlord-friendly city, and lately they have been enforcing our local laws on security deposits very strictly. This means if you are not taking care of all of your paperwork, paying interest of the right amount at the right times, and returning the correct amount on time, you can be sued for three times the deposit plus attorney fees and your chance of winning isn’t very good.
With these rules in place and now being strictly enforced, many landlords are in fear of losing out on much more than the repair costs of a stained carpet. So what is the solution? For most of the bigger companies in Chicago, and the savvy small landlords, the solution is in the form of a non-refundable move-in fee.
It works like this: you take up to half of one month’s rent, and it never has to be returned. The hope is that if you have three apartments, all paying a $300 move-in fee, and one tenant does damage, the $900 covers the property damage that you can’t recover from the tenant.
Before switching to a move-in fee though, I would advise to make sure your screening process is up-to-date and ready to go. The better the tenants you place, the less likely it is to need to use money from the move-in fee to make any repairs. Also remember, if the damage is really bad, you can always go after them in court, just like you would if the damage is over the amount kept as a security deposit.
Be sure to talk to your CPA and attorney before following any advice found here, as this advice is not meant to be taken as legal advice. If you have rental properties in Chicago, and want to turn them into monthly mailbox money without the headaches, give us a call to discuss our property management services at Chicago Style Management.
