If you own a property in Illinois, one of the first things on your mind will be protecting it from damage. As a matter of fact, most Illinois landlords take security deposits to protect themselves from damages the tenant might cause. What’s more, most landlords only take a month and a half of a deposit. Seeing that a new landlord might have a few questions about how to do this right, I decided to make a post about what the law requires.

How much should the security deposit be?

Illinois is one of the few states in the country that does not set a maximum for a security deposit! Although a landlord can charge any amount she wants, that is certainly not advisable. Housing is a business, and you have to make sure to consider your property against your competition when you set the amount. We find that most tenants are agreeable to anything under two months rent placed on deposit.

How do I keep the security deposit?

Undeniably, this is the hard part. The Security Deposit Return Act has some very strict rules, and even stricter penalties. While I think I could do an article on every single aspect of this law, here are the quick pointers:

  • Keep it in a separate account away from your operating budget.
  • Hold it in an interest bearing bank account.
  • Tell your tenant which bank holds the deposit.
  • Make sure to pay your tenant a credit for the interest every 12 months.
  • Keep an itemized receipt of anything you pay from the account.

How long can I hold onto it?

After your tenant’s lease ends, you, the landlord, have only 45 days to return the security deposit. However, the landlord has only 7 days if the property became uninhabitable. As a matter of fact, this is probably the most common area where landlords break the law and are hit with significant penalties. Don’t hold on — move on!

What can I charge to my tenant?

For starters, you cannot deduct damages for ordinary wear and tear. In other words, you can deduct any damages beyond ordinary wear and tear! Of course, as I said earlier, keep that itemized receipt for any expenses you pay from the account.

Moreover, you have only 30 days to prepare an estimate of the costs and expenses, and give it to your tenant. You can hold the security deposit for a little longer, to the 45 days we talked about earlier. However, if you do not provide that initial cost estimate to your tenant, you are completely barred from taking any deductions from your tenant’s security deposit.

You must, in any event, give your tenant the complete receipts for any charges you made against the security deposit 60 days after they move out!

So, what happens if I don’t?

Certainly, you want to comply with these laws. Truly, they have real teeth. The following are the penalties for failing to comply, and I think nothing will show you how severe they are better than reading them yourself!

  • DOUBLE the damages caused by holding onto the security deposit.
  • The return of the whole security deposit.
  • ALL attorneys fees and costs the tenant suffered from suing to get it back.

As an attorney, I can assure you that any attorney will take a case that pays for one’s fees. I’ll also take any case that’s going to get me a new client for every single occupant in your building. Illinois is a very tenant friendly state, and the only way to protect yourself under this law is to follow it closely.


In order to avoid the harsh penalties of Illinois Security Deposit Law, make sure you keep the account separate, pay interest on it, keep your receipts and return it quickly. Once your system is put into place, your property will be well managed, cash flow appropriately, and above all, protect you from anything in the future. — J