Chicago Renters Get Protection from Losing Security Deposits
May 11th, 2010
Renters get protection from losing security deposits on foreclosed homes
Chicago renters who lose their apartments to the foreclosure crisis would no longer lose their security deposits, too, thanks to a crackdown advanced Tuesday by a City Council Committee.
The Mayor Daley-sponsored ordinance would require banks that take over foreclosed buildings to repay security deposits to displaced tenants.
Currently, the city’s Residential Landlords and Tenants Ordinance exempts lienholders from having to repay security deposits.
That leaves tenants with little recourse but to pursue financially-strapped landlords, who often fly the coop, leaving tenants in the lurch.
Last year, that cost renters as much as $7.3 million — an average of $860 for every one of 8,500 foreclosed units, according to Ellen Sahli, the city’s first deputy commissioner of Community Development.
Fearing that the scales were being tipped too heavily in the tenant’s favor, Buildings Committee Chairman Bernard Stone (50th) proposed giving landlords 14 days to remedy violations pertaining to their handling of security deposits.
Stone noted that security deposits returned even one day late could force the landlord to pay double.
But, Sahli argued, "I do not believe, as some have suggested, that [Daley’s ordinance] tips the delicate balance between tenant and landlord advocacy groups — a balance that the city has attempted to honor. Rather, this ... is done in direct response to the foreclosure crisis and impacts lienholders — not landlords."
Stone’s amendment was held in committee.
The marathon debate has prompted some aldermen to argue that the city needs to do more to make certain that security deposits — typically the first and last month’s rent — are properly secured in interest bearing accounts.
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