Q–My mother lives in a large apartment complex in Chicago. The apartments are small, and so the security deposits are also relatively low. Interest on the security deposits would probably amount to between $15 and $20 per year.
The problem is that the landlord tells the tenants that if they want interest on their deposits, they must pay an accounting fee of $25. Since the accounting fee exceeds the interest that would be collected, obviously this is a deterrent to a tenant claiming the security deposit.
Further, if these tenants, who are mostly senior citizens, start sending demands to the landlord, they better start looking for a new place to live. While the law might give my mother and the other tenants the right to claim that deposit, the landlord is sure to retaliate and not renew the leases.
I realize the law prohibits retaliation, but proving it is another matter, and so it seems sending demand letters is an impractical solution.
Is there a practical solution to ensure that the tenants can get the interest on the security deposits to which they are entitled?
A–Sending the demand letters is a practical solution, and the landlord faces a far greater risk than the tenants in this situation.
The right to interest under the City of Chicago Residential Landlord and Tenant Ordinance is unconditional. The landlord’s demand that an accounting fee be paid as a condition to payment of the interest clearly violates the ordinance. Also, since the effect of payment of that fee is to negate the benefit that the ordinance clearly intends to provide to the tenant, there is little doubt that the demand for payment of the accounting fee violates the ordinance.
There is no provision in the ordinance that specifically prohibits the charging of that fee, since the payment of interest is unconditional. However, there is a precedent against the charging of fees for other absolute rights that tenants possess. For example, the landlord is not allowed to charge a fee for the tenant’s subleasing of an apartment. Also, the late fees that can be charged for late payment of rent are specific and absolute. A landlord cannot charge more than the amount specified in the ordinance. Conversely, some landlords started offering a discount for timely payment of rent, which had the effect of creating a penalty greater than that allowed for late payment. The city ordinance was amended to prohibit that conduct as well.
Since the penalties and charges that can be assessed against tenants are specific in nature, it is clear that the spirit and intent of the ordinance is to prohibit the type of fee that the landlord is charging in this matter.
Assuming your mother does make a claim for unconditional payment of interest, that demand should be made in writing. The city ordinance states that a tenant cannot be subject to retaliation for exercising rights that exist under the ordinance. That retaliation includes, but is not limited to, the landlord failing to renew the lease, unreasonably raising the rents or denying services otherwise provided to the tenant. Most important in your mother’s situation is that you are not required to prove retaliation on the part of the landlord.
In fact, the ordinance specifically addresses this point. The ordinance states that if the tenant has asserted rights that exist against the landlord, and the landlord takes any action that could be considered retaliation at any time for a period of 12 months after the exercising of those rights, there is a presumption in favor of the tenant that the landlord’s conduct is retaliatory in nature. That means that if the landlord fails to renew the lease, as you fear, for a period of one year after your mother demands payment of the interest on her deposit, the court would presume that the landlord took his action to retaliate against your mother.
In those situations, the landlord has the burden of proof that there was a lease default or a legitimate business reason for the action that the landlord took. Under the circumstances you describe, a judge would probably be reluctant to rule against your mother in an action taken by the landlord.
More to the point, if a group of tenants made the same claim for interest on their deposits, the landlord has a fight multiplied by the number of tenants making the claim.
If the landlord tries to take action against all, or a substantial number of, tenants who claimed the interest on the deposits, it would be almost impossible for the landlord to prove that his actions against the tenants were not retaliatory in nature. Further, while a landlord could afford to fight one tenant, or force one tenant out of the building, economically, it is unlikely that the landlord could afford to lose a substantial number of tenants, and create a substantial number of vacancies, in the building at one time.
There is strength in numbers, and most likely before a landlord allows the situation to be blown into an all-out tenant revolt, he is likely to change the “accounting fee” policy.
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Robert A. Boron, a Chicago attorney who specializes in leasing matters, writes about landlord and tenant issues for the Tribune. Questions to him can be addressed to Rental Q&A, Your Place section, Chicago Tribune, 435 N. Michigan Ave., Chicago, IL 60611. Rental Q&A
