The property manager of the Grand Ohio, a luxury apartment building in Streeterville, leaned forward in his chair, clearly agitated.
”We had a doctor in the building,” he recalled. ”He and his wife had a one-bedroom apartment. You would not believe the condition of that apartment. There were dirty, greasy handprints all over the walls; the stove was a disaster. They had spilled something-a red liquid-which had run down the cabinet into four drawers, where it had caked and dried. The floor was never washed and the carpeting was an absolute disgrace.”
Ken Clark shook his head, still amazed by what he had found after the couple moved out-the worst case of apartment abuse he`d ever seen. Then he laughed. ”Do you know that his wife called me and screamed at me on the phone because we didn`t return their entire security deposit? I said, `I can`t believe a medical doctor would live like that.` ”
Welcome to one of the thorniest, most litigation-prone areas in the entire real estate rental business: the security deposit. The players include landlords who need protection from tenants who skip out on the rent or damage the property, and tenants who need protection from unscrupulous-and sometimes criminal-landlords.
300 complaints a year
”It`s still a major problem that landlords don`t return security deposits,” said Tim Carpenter, executive director of the Metropolitan Tenants Organization, the Lakeview-based group designed to help tenants with a wide range of rental problems. ”It`s one of the most common complaints we hear. Out of the more than 2,000 calls we get every year, more than 300 are about security deposits.”
The drama begins innocently enough. In Act One, a prospective tenant decides to move into an apartment. The lease is signed and a security deposit- usually equal to one month`s rent (plus an occasional surcharge for pets)-
is handed over to the leasing agent.
Act Two is where the story really develops, with the tenant either taking care of the property or, in the disgusted words of several area landlords,
”trashing it.”
But the drama reaches its climax when the tenant moves out and tries to get the security deposit back. ”We use the words `natural wear and tear` in the lease,” said Clark, ”and it`s the interpretation of that clause that causes the most problems.”
It is not natural, for example, to stain or burn holes in the carpeting. Nor is it considered natural, in many buildings, to paint or wallpaper the walls, to say nothing of leaving holes. ”We`ve had people who put up elaborate shelving units in the closets,” said Clark, ”and then pulled them out when they left, leaving more than 100 eighth-inch holes in the closet.”
Time is money
The reason landlords get so riled about such behavior is that it costs them time, which ultimately costs them money. At issue is the time it takes for owners, building crews or outside contractors to putty holes, tear down the wallpaper and rip out the carpeting before getting started on the repainting and other normal improvements that need to be made before the next tenant can move in.
But let`s assume that you are a model tenant who intends to leave the apartment in the same condition as-or better than-you found it. There are several steps you can take to ensure that your security deposit is handled properly and returned to you in full.
First, understand that almost every security deposit is protected by city and state law. Under state law, the security deposit rules apply to landlords and tenants living in buildings of 10 units or more. In buildings with more than 25 units, the landlord is required to pay 5 percent interest on the security deposit and, unless he intends to prove rent due or apartment damages, is required to return that deposit within 45 days after the tenant moves out.
The Chicago Landlord-Tenant Ordinance, which went into effect in November 1986, goes even further in seeking to protect both sides. It covers all rental units, including condominiums (but excluding cooperatives) except owner-occupied buildings with six or fewer units. And it stipulates the following rules and regulations regarding security deposits:
– The tenant must be given a receipt for the security deposit.
– As of January 1, 1987, that deposit must be placed in an interest-bearing account (separate from the building`s other accounts) with an annual interest rate of 5 percent.
– The interest on the security deposit must be returned to the tenant within 30 days of the one-year anniversary after the deposit was first paid. If the tenant remains in the unit, the interest must be paid in cash or credit toward the rent.
– When the tenant moves out, the deposit must be refunded within 45 days unless the landlord can prove that rent is due and/or the unit has been damaged. If the landlord intends to prove damages, he must give written notice of this intent within 30 days and, within 60 days, must send proof of those damages to the tenant. If the landlord does not furnish such notices, he can be ordered to pay the tenant two times the security deposit, court costs and attorneys` fees.
According to Willie Granderson, director of the Fair Housing Unit of the Chicago Department of Housing, resolving security deposit disputes takes up a significant portion of his staff`s time.
”We try to mediate,” said Granderson. ”Many times, landlords just don`t want to refund the money. I had a guy the other day-the lady moved out in November-and he still had the security deposit. He said, `I`m still working on the apartment.` He said she`d damaged it, but he didn`t put her on notice as required by law. I`d say we`ve retrieved almost $40,000 in security deposits for tenants.”
Courting trouble
But it isn`t always the landlord who`s the bad guy. ”A lot of tenants say, `I`m not going to pay the rent the last month,` ” said Granderson. ”But the security deposit is not supposed to be used for the last month`s rent and the lease probably says so. Then the landlord can take the tenant to court.” For the tenant, using the security deposit as the last month`s rent may sound tempting, but it leaves the landlord unprotected if the apartment is damaged. ”We`ve had people ask to be allowed to do it,” said Clark, ”and we explain why we can`t. Then we have some who do it, regardless.” This is where the legal profession can step in, because the lease stipulates that the rent be paid, usually by the first of the month. ”For anything over $200,” said Clark, ”we`ll pursue it.”
Some suburban buildings ask for a smaller security deposit (less than one month`s rent) as part of their incentive package, said one leasing agent,
”sometimes as little as $250. But it isn`t a good idea, because if the apartment is trashed, the landlord has almost nothing.”
Trashing of apartments is not confined to less expensive buildings.
”There is absolutely no correlation between the rent on the apartment and the way people take care of it,” said the leasing agent.
If the apartment is left spotless, should the tenant expect to get a full refund? ”Absolutely,” said Clark. ”We build in one hour of work on the apartment for cleaning. When we have to do more than that, then we have to bill it back to the tenant.”
Ensuring a refund
So what can tenants do to ensure a full refund?
1. Make sure you get a receipt for your security deposit.
2. If you live in Chicago, in a building with more than six units (or outside the city in a building with more than 25 units), make sure that the deposit is placed in a separate, interest-bearing account with 5 percent interest.
3. Check the apartment thoroughly when you move in and make notes-with your leasing agent-of any damage to walls, floors, fixtures and appliances. Put those notes in writing, and keep a copy.
4. Clean the apartment thoroughly before moving out, especially the kitchen and bathroom. The refrigerator, stove, oven, sinks and tub should be spotless. The carpeting should be vacuumed thoroughly.
5. Walk through the apartment with the leasing agent before you move out, going over the building`s cleaning checklist and making note of the previous damage and any new damage.
6. Leave a forwarding address with the leasing agent so that you can receive your security deposit within 45 days.
7. Remember that the landlord is required to give you notice, within 30 days, of his intent to withhold some or all of the security deposit for rent owed or apartment damage. And the landlord is required to furnish proof within 60 days.
8. If there is a dispute, call the building manager and ask to see the bills and timesheets associated with the cleaning and renovation.
”The provisions of the new Chicago ordinance set down pretty successful guidelines,” said Carpenter, who added that complaints about security deposits seem to be decreasing. ”It really helps tenants get their money back when they go to small-claims court.”
