Violations, Termination, Maintenance Disputes

There Is No “De Minimus” or “No Harm” Exception to RLTO Section 5-12-080

All relevant authority rejects excuses for commingling and the “no harm” argument where the security deposit is returned. Plambeck vs. Greystone Management, 281 Ill. App. 3d 260, 272; 666 N.E2d 670, 676-7 (1st Dist. 1996).

Security Deposits are Held “In Trust” by the Landlord under Section 5-12-080(a) and Are Not Part of the Bankruptcy Estate of the Landlord

A landlord holds the tenant’s security deposit “in trust” pursuant to the standards under RLTO 5-12-080(a), and thus the landlord is a fiduciary of that trust. Thus, if a landlord spends the money they have committed an act of “defalcation” and the debt (i.e. the security deposit and any damages) is not dischargeable in bankruptcy (see 11 U.S.C. § 523 (a)(4)). In Re McGee, 353 F.3d 537, 540-41 (7th Cir. 2003); see also, Starr vs. Gay, 354 Ill.App.3d 610, 613; 822 N.E.2d 89, 92 (1st Dist. 2004), holding that Section 5-12-080(a) is “designed to keep tenant monies out of the reach of creditors . . . [and to prevent] a landlord’s intentional or inadvertent personal use of tenant funds.”

The ‘Credit Method’ of Transferring Security Deposits at Closing Does Not Violate RLTO 5-12-080(a) Because It Does Not Commingle or Put At Risk the Security Deposit

The ‘credit method,’ which is a transferring of a security deposit as a credit given at the close of sale of a building, between the current owner and a third-party purchaser does not result in the commingling of the tenant’s security deposit with the landlord’s assets since it does not render the deposit attachable to landlord property  or otherwise violate the trust that a tenant’s security deposit is held in by a landlord.  Starr vs. Gay, 354 Ill.App.3d 610, 615; 822 N.E.2d 89, 93-94 (1st Dist. 2004). However, there must be a real estate closing that includes a credit in the amount of the tenant’s security deposit to fall under this defense. Id. at 615-16, 822 N.E.2d at Page 3 of 94.

When is a Unit “Vacated” Under RLTO 5-12-080(d)

A tenant vacates when he or she actually surrenders possession of the leasehold, and the 45 day window for return of the security deposit accrues at that time. Meyer vs. Cohen, 260 Ill. App. 2d 351, 361; 632 N.E.2d 22, 28 (1st Dist. 1993).

The retention of “keys” is not dispositive in determining whether a tenant willfully held over after the expiration of a tenancy in Chicago. Instead, the Court should evaluate whether “after the expiration of the lease term, the tenant exercised dominion over the premises indicative of an intent to continue the tenancy.” Hoffman vs. Altamore, 352 Ill. App. 3d 246, 250; 815 N.E.2d 984 (Ill. App. Ct. 2004) citing Hoopes vs. Prudential Insurance Co. of America, 48 Ill. App. 3d 146 (1977).

Reasonable Wear and Tear Defined Under Chicago RLTO 5-12-080(d)

“[Ordinary wear and tear] has been defined as the wear which property undergoes when the tenant does nothing more than to come and [go] and perform the acts usually incident to an ordinary way of life.” Stated otherwise reasonable wear and tear is the depreciation which occurs when the tenant does nothing inconsistent with the usual use and omits no acts which it is usual for a tenant to perform.  Boyer vs. Buol, No. 1-13-2780 (1st. Dist. 2014).

Landlord’s Deduction for Postage is Improper Under RLTO 5-12-080(d)

Deductions from security deposits are covered in RLTO Section 5-12-080(d) which provides, d) The landlord shall, within 45 days after the date that the tenant vacates the dwelling unit, return to the tenant the security deposit or any balance thereof and the required interest thereon; provided, however, that the landlord, or successor landlord, may deduct from such security deposit or interest due thereon for the following: (1) Any unpaid rent which has not been validly withheld or deducted pursuant to state or federal law or local ordinance; and (2) A reasonable amount necessary to repair any damage caused to the premises by the tenant. These two (2) enumerated deductions listed above are the only deductions that a landlord is allowed to take from a tenant’s security deposit. “Under the plain language of the Ordinance, as well as the reasoning in Nadhir, it seems clear that, in the absence of an agreement between the parties, a landlord may not unilaterally deduct postage from a tenant’s security deposit.” Boyer vs. Buol, No. 1-13-2780 (1st. Dist. 2014); See also Nadhir vs. Salomon, 2011 IL App. 110851 (1st Dist. 2011).

Photocopies of Checks are Not “Paid Receipts”Under RLTO 5-12-080(d)

“We note initially that the Ordinance does not define the term nor do the parties cite any law as to its meaning. However, Black’s Law Dictionary defines a receipt as “[a] written acknowledgment that something has been received.” Black’s Law Dictionary (9th ed. 2009); see also Page 4 of also Merriam-Webster’s New Collegiate Dictionary (7th ed. 1969) (defining a writing acknowledging the receiving of goods or money). Thus, in order to qualify as a receipt, the documentation provided by defendants would have to show that the $220 in question was actually received by Bolek & Lolek. This requirement is not satisfied by a photocopy of a check that has not been negotiated by its payee. As plaintiff points out in her brief, a photocopy of an un-negotiated check can easily be produced without the check being given to anyone, just like a picture of cash.” Boyer vs. Buol, No. 1-13-2780 (1st. Dist. 2014).

No Requirement of “Willful” or “Knowing” For Violation of RLTO 5-12-080(f)

“Nothing in RLTO Section 5-12-080(f) requires proof that the landlord’a actions were knowing or willful. A landlord’a duty to comply with the statute is absolute.  If a landlord requires a security deposit, the landlord is required to pay the tenant interest on that deposit. If he fails to do so, he is liable to the tena nt for the damages specified in the ordinance. There are no exceptions. Where a statute is clear and unambiguous, as this one is, the court should not look to extrinsic aids for construction. The statute must be enforced as written, and a court may not depart from its plain language by reading into it exceptions, limitations, or conditions not expressed by the legislature.” Lawrence vs. Regent Realty Group, Inc., 197 Ill. 2d 1, 9-10; 754 N.E.2d 334, 339 (2001).

Damage Awards Under RLTO 5-12-080(f) are Not Abated For Portions of Security Deposit Actually Returned

The actual security deposit is not included in the statutory damages available under RLTO 5-12-080(f). The RLTO provides for the return of the deposit and statutory damages when the landlord fails to issue a proper receipt to a tenant or prospective tenant. Solomon vs. American National Bank and Trust Co., 243 Ill. App. 132, 136-137; 612 N.E.2d 3, 10 (1st Dist. 1993).

RLTO 5-12-080(f) Imposes “Statutory Penalties” and Are Subject to Two-Year Statue of Limitations

Under the Illinois Code of Civil Procedure, “actions for damages for a statutory penalty” have a two-year statute of limitations, 735 ILCS 5/13-202 (West 1996). Section 5-12- 080(f) imposes a “statutory penalty,” and is therefore subject to that two-year statute of limitations. Namur vs. The Habitat Company, 294 Ill. App. 3d 1007, 1013; 691 N.E.2d 782, 786 (1st Dist. 1998). Where Plaintiff’s cause of action is based upon commingling of assets, it accrues when the landlord deposits the security deposit. Id.

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