2024 is bringing a lot of changes to the legal landscape of Chicago real estate.
Buckle up and let’s dive into the must-know ordinances that are reshaping Chicago’s property market this year!
Let’s start with the changes to Chicago’s Residential Landlord Tenant Ordinance.
Updates to the Chicago Residential Landlord Tenant Ordinance (RLTO)
Chicago’s Residential Landlord Tenant Ordinance (RLTO) got a fresh update in 2024, and landlords need to take note. Now, every landlord must provide a summary of the ordinance to prospective tenants. This summary must be attached to every written lease and lease renewal, and even handed over if there’s just an oral rental agreement.
Failing to provide this summary isn’t something to take lightly. Landlords who skip this step could face a $100 fine, potential lawsuits, and even give tenants the power to break the lease without penalty.
There’s also a tiny change to interest rates on security deposits. For 2024, the interest rate is set at only 0.01%. This number is based on the average rates at Chase Bank as of the end of 2023.
Limitation on Fees
You can’t charge any fees before a tenant moves in—like application, credit check, or move-in fees—unless you provide an itemized list of what those fees cover. You can’t rename the fee or charge for routine maintenance.
Starting January 1, 2025, there’s also a cap on how much of a discount you can offer for early rent payments. Discounts can't go over $10 per month for the first $500 of rent, and only 5% for anything over that. So, make sure your rental agreements are in line with these limits.
If you try to sneak in prohibited charges, tenants can take action. They might recover two months’ rent, and you could be slapped with fines between $200 and $500 per offense.
Clean and Affordable Buildings Ordinance (CABO)
The Clean and Affordable Buildings Ordinance (CABO) is Chicago’s bold move to cut down on emissions and embrace cleaner energy. If you’re planning to build or majorly renovate, get ready to swap out natural gas for zero-to-low-emission energy systems. This ordinance kicks in if you’re adding at least 10,000 square feet or increasing your building’s size by 25%.
CABO isn’t just about going green; it’s about saving money too. By pushing for energy-efficient electrification, this ordinance could help homeowners save over $1,000 a year on utility costs. With heating bills on the rise, that’s a win-win for both landlords and tenants.
Health is another big focus. Studies link natural gas to a spike in childhood asthma, especially in Illinois. CABO aims to improve indoor air quality by reducing reliance on gas, making your properties safer and healthier for tenants.
Leak Relief Pilot Program (LRP)
The Leak Relief Pilot Program (LRP) helps property owners facing significant water bill increases due to undetected or sudden leaks. A property owner may participate in the LRP if:
1. He or she applies to the Comptroller;
2. The water service line serving his/her property has experienced an eligible leak; and
3. He/she has never been granted relief under the LRP for the property in question.
For the leak in the property to qualify, the following conditions should happen:
1. The water service line is controlled by a meter located outside of the property,
2. The leak is located on the water service line underground between the meter and the property; and
3. The leak must have impacted the utility bill
4. The Department of Water Management must confirm its location.
5. The leak must also have been repaired on or after January 1, 2023.
Relief is based on either the 12-month period before the leak or the 6-month period after the repair, adjusted as needed by the Department of Finance.
The program is open to property owners of single-family homes, 2-flats, 3-flats, and commercial properties with water service lines one inch or smaller. Once enrolled, the Department of Finance reviews the billing history and water usage to determine the affected service periods. They calculate the average water usage during the basis period and provide a credit adjustment to reduce charges during the leak period. No adjustment is made if the basis period average is higher than the leak period average.
The program also offers a payment plan for those with outstanding balances, starting as low as $25 per month, to provide additional financial assistance. The LRP aims to address unexpected water and sewer bills due to underground leaks. The program will be in effect from January 1, 2025, and will expire on December 31, 2026, without further action from the City Council.
Amended Affordable Requirements Ordinance
In 2024, some new ordinances shook up the Affordable Requirements Ordinance (ARO):
First up, Ordinance No. SO2023-0002888: It’s all about giving veterans a fair shot at affordable housing. Developers now need to set aside at least 10% of their affordable units for veterans, and these units are theirs to grab for the first 30 days after the project opens. If any of these units are still available after that, they can go to other income-eligible tenants. This rule applies to both on-site and off-site units, and if the math gets tricky (like if 10% of the units isn’t a whole number), you round down. So, if you’ve got 15 units, at least one needs to be reserved for veterans.
Next, Ordinance No. 02024-0008891 is the rulebook for how many affordable units developers need to provide, depending on the type of project and location. For rental projects in hot spots like downtown or community preservation areas, 20% of the units need to be affordable, targeting those making around 60% of the Area Median Income (AMI). There’s also a cap—no affordable unit should go to someone earning more than 80% of the AMI. Developers have some flexibility with income levels, but the average has to hit the target, and all levels must be multiples of 10% of the AMI.
Crackdown on Vacant Commercial Storefronts
If you own a vacant commercial storefront, you now have to register it with the Chicago Department of Buildings, keep up liability insurance, and pay a $100 registration fee every six months. Plus, you’ve got to post a notice of registration where everyone can see it and take down any old signage from past businesses.
Not every empty space gets the “vacant” label, though. If you’re in the middle of remodeling or have a permit under review, your property is off the hook. The same goes for storefronts that are up for sale or rent with clear contact info displayed. Basically, as long as there’s visible activity, you’re in the clear.
But don’t get too relaxed—there are minimum standards you must meet to keep things in check. This means maintaining the exterior, securing the premises, and ensuring the place is free of debris. If the building stays vacant for over six months, you’ll need to secure any openings with proper materials (and no, plywood doesn’t count), and make sure there’s a functioning burglar alarm monitored by a third-party company.
Liability insurance is a must for any vacant property, kicking in 30 days after the space becomes empty. You need at least $1 million in coverage per occurrence, and if your insurance lapses, you’re required to inform the city within 30 days. Miss these steps, and you could face fines, or worse, if the building’s condition leads to injury or death.
Failing to follow these rules can get costly. Not only will the registration fee jump to $250 if you don’t comply, but repeated violations could even lead to jail time if your unsecured building causes harm. Chicago’s making sure vacant properties don’t become a problem, so staying on top of these requirements is key.
Reward Program for Reporting Illegal Dumping
Chicago is taking a stand against illegal dumping with a new reward program that could put $100 in your pocket. If you spot illegal dumping and report it, and your tip leads to a conviction, you’re eligible for the reward—unless you’re a city employee, of course. The goal is simple: keep the city clean by encouraging everyone to pitch in.
To qualify, just report the incident through the city’s 3-1-1 system or any of the city’s digital platforms. Make sure to provide your contact details and complete a witness report. If your information helps convict the culprit, you’re in line for the reward. And if more than one person reports the same incident, the reward will be split equally.
The Commissioner is the one who decides if you meet the eligibility criteria for the reward. If your tip results in a conviction, they’ll notify the Comptroller, who will then issue the payment. It’s a straightforward process designed to reward those who help keep Chicago tidy.
Additionally, anyone found guilty of illegal dumping will face an extra $20 fine, on top of any other penalties. The money collected from these fines will help fund the reward program, ensuring it continues to motivate residents to report violations.
In short, if you see something, say something! Reporting illegal dumping not only helps clean up the city, but it could also earn you a quick hundred bucks. It’s a win-win for everyone—except for those breaking the law.
And last but not least, there’s a new court ruling favoring Chicago landlords!
New Court Ruling in Favor of Chicago Landlords
In November 2023, Illinois’ 1st District Appellate Court delivered some great news for landlords. They clarified a key point in the Chicago Residential Landlord Tenant Ordinance (RLTO): If you’re not taking security deposits, you don’t need to bother with attaching a security deposit interest rate summary to your leases. This decision stemmed from the case Hundley v. WPD Management, LLC.
Previously, Section 5-12-170 of the RLTO required landlords to include a summary of security deposit interest rates with every new lease and renewal, even if they didn't take a deposit. But the court has now said, “No deposit? No summary required!”
In the case, John Hundley and others filed a class action against WPD Management, arguing that their lease agreements should have included the interest rate summary, even though they didn't involve any security deposits. The trial court tossed out the case, saying the tenants hadn't suffered any harm from this omission.
The key question was whether landlords without security deposits still had to share interest rate info. The plaintiffs thought so, but WPD Management, which didn’t collect any deposits, didn’t see the point. The court agreed with WPD, ruling that the RLTO’s rules about interest rates are only relevant if there’s an actual security deposit involved. No deposit? No liability for missing summaries!
Conclusion
Staying on top of Chicago's new 2024 ordinances is your secret weapon for success in the real estate game. These rules are your playbook, covering everything from tenant rights to building codes. Get familiar with them to dodge legal headaches, save money, and keep your properties compliant and appealing.
Chicago is shifting towards being more tenant-friendly and sustainable, so knowing these ordinances helps you stay ahead of the curve. Whether you’re managing properties or investing, being informed means you’ll avoid fines and boost your investment potential.
Ultimately, these new ordinances aren't just about following the law—they’re about setting yourself up for success in Chicago's evolving real estate landscape.
