Chicago’s Block 606 Ordinance – The Tenant Right of First Refusal

As of January 1, 2025, the City of Chicago is now experimenting with a tenant’s right of first refusal for any property that a homeowner may wish to sell in Block 606. If your home is in the image above, you’re going to need to know about this ordinance, or you simply won’t be able to sell the home. That’s right, the City will stop you from selling the house to anyone but your tenant. Before this week, I had never heard of this law, and today alone I got two calls on it. So, as a service to Chicago sellers and to my fellow attorneys, I’ll spell out the requirements to you.

Which Units Have a Tenant Right of First Refusal?

Under Ordinance, in exact words, any home in the Block 606 District cannot be sold, if tenant occupied, without getting the tenant to sign off on waiving the right to purchase it. Ordinance 17-7-0591 says, “The Predominance of the Block (606) District consists of all parcels zoned RS3 and RT3.5 and within the area bounded by: Addison Street, the North Branch of the Chicago River, Western Avenue, Division Street, California Avenue, North Avenue, Kedzie Avenue, Hirsch Street, Kostner Avenue, Fullerton Avenue, Pulaski Road.” The graph is above, and it’s way easier to read.

If you’re interested in whether your property is zoned RS3 or RT3.5, I have a tool for you as well. You can simply check your address with my favorite website, Second City Zoning. If you returned RS3 or RT3.5, keep reading, or just click below and I’ll do the legwork for you.

Which Transfers are Exempt

Notice that I’ve said that only transfers can be exempt, not units. The city does not care whether your unit has certain characteristics, but rather whether your transfer truly changes ownership. Section 05-11-040 sets out the exemptions but there are really only three kinds of exempt transfers:

1. A transfer into a trust or other legal entity where the same human being will maintain control over the property before the sale and after the sale.
2. A transfer between family members (including cousins, nephews, grandparents and immediate family).
3. A transfer pursuant to a court order, bankruptcy or foreclosure.

Unless you are simply adjusting the ownership of the property, or losing the home to a financial institution, you are going to need to issue the tenant right first refusal paperwork.

What Paperwork do I need for the Tenant to Waive the Right of First Refusal?

You need this one. And only this paperwork. There is no other paperwork you can use, or should use. The City’s Department of Housing made a form that is required, and there’s no workaround. It is extremely easy to fill out.

In Section 1 of the Tenant Right of First Refusal paperwork, make sure that you include the Rental Property Name (which is probably just the address), its address, the number of buildings, units and number of units of each type. You will also need to disclose the listing price that you expect to get for this property. Then, ask your tenant to please sign the Waiver of Right of First Refusal, print their name, and disclose their unit number.

In Section 2 of the Tenant Notice of Intent to Sell paperwork, you’ll put your own information. This is the same as if you were putting your address on a letter. There is no complexity here.

In Section 3, you write a form affidavit. The first blank is your name. You swear that you own the property. The second blank is for the property address, as is the third blank. Then you sign this document in front of a notary. By doing so, you will have completed a sworn statement that you intend to sell the property at the price you put in Section 1.

What do I do with this Notice of Intent to Sell Paperwork?

If you have 4 or fewer units in your building, which is true of most homeowners, you will provide a copy of the paperwork to the tenant 30 days before listing or otherwise offering the property for sale. You will have to properly serve this paperwork on the tenants by personal service or certified mail with signatures.

If you have 5 or more units in your building, you will provide this copy to the tenants 60 days in advance of offering the property for sale. You will then post copies of this notice on the doors of the building so anyone who rents with you can see it. Then you email the notice to the Chicago Department of Housing (DOH@CityofChicago.org) with the subject line Notice of Intent to Sell [Property Address](606 District).

You cannot ask the tenants to waive their rights of first refusal until the following timelines elapse:

1. For buildings with 1-2 rental units, the tenants have 15 days to exercise their right of first refusal or it is waived.
2. For buildings with 3-4 rental units, the tenants have 30 days from receipt of the notice to exercise their rights of first refusal.
3. For buildings with 5 or more units, the tenant association or individual tenants have 120 days from the date of notice to exercise their rights.

What if the Tenant Asks for Documents?

The Tenant(s) can ask you for a multitude of documents. Quoting directly from their tenant rights forms,

• The most recent rent roll, including each unit number and the monthly rent charged for each unit.
• A list of all vacant units.
• A statement of the rental property’s vacancy rate during the preceding 12 months.
• The income and expense reports for the 12 months preceding the notice, including capital improvements, real property taxes, other municipal charges, and any fees, fines or other monies due and owing to a government agency.
• Any information regarding the rental property’s financial condition.
• Architectural and engineering plans and specifications (blueprints).
• A list of any alleged Building Code violations, a list of all litigation regarding the building including any alleged Building Code Violations, and the status of any Building Code violations closed or addressed over the 12 months preceding this notice.

The Tenant(s) have 60 days from the date of notifying you that they want documents to conduct their due diligence, secure financing and close. You cannot charge them more than a 5% earnest money deposit.

What Happens When I Find a Buyer?

If you find a Buyer who is paying what you’re asking, you’ll notify the tenants of the accepted offer and the price on which you agreed. You will need to follow the above timelines.

If you do not find a Buyer and you take a price reduction, for each 10% of the price you reduce, you will need to do everything above again. The notice becomes invalid if the price changes by 10% or more.

I’m Buying a Property in Block 606, What Now?

Have I got news for you! When you buy a property subjected to the tenant right of refusal ordinance, you, as the purchaser, must allow the current tenants to remain in the property until the longer of six months from the date of sale or their leases expire, unless you are making an eviction for cause.

These penalties are really steep, too. Each unit is a separate violation, and each violation has a minimum fee of $200.00/day. For a 4 unit building, you could be looking at an $800.00 per day fine! Over the course of a year, that’s a quarter million dollars. This is mandatory to follow, and we’ve brought you the only article that tells you what to do on the whole internet.

If You Have Questions, Call Me!

Don’t risk your sale — or a $250,000 mistake.
If your Chicago property falls within Block 606, the new Tenant Right of First Refusal ordinance applies to you.
Before you list, before you notify a buyer — you need to get this right. Get on my calendar, and let’s talk. No charge.