Chicago Security Deposit Law: Complete RLTO Guide
Chicago's RLTO imposes strict security deposit rules on landlords — with penalties of double the deposit for non-compliance. Here is exactly what you need to know.
High-stakes compliance area: Chicago's RLTO security deposit rules are among the most strictly enforced provisions in Chicago landlord-tenant law. A single procedural error — such as failing to disclose the bank account within 14 days — can result in the landlord owing the tenant double the deposit plus attorney fees, regardless of whether the tenant suffered any actual harm.
The 5 Core RLTO Security Deposit Requirements
Hold in a Separate Interest-Bearing Account
The deposit must be held in a federally insured interest-bearing account, completely separate from the landlord's personal or operating funds. Commingling the deposit with other funds is a violation.
Disclose the Bank Account Within 14 Days
Within 14 days of receiving the deposit, the landlord must provide the tenant with written notice of the financial institution's name, address, and the account number where the deposit is held.
Pay Annual Interest
The landlord must pay interest on the deposit annually (or credit it toward rent). The City Comptroller sets the rate each year. For 2026, the rate is 0.01%. Interest must be included with the deposit return.
Return Within 30 Days (or 45 Days with Deductions)
Return the full deposit plus accrued interest within 30 days of the tenant vacating. If deductions are claimed, provide an itemized written statement with receipts within 30 days, and return the balance within 45 days.
Only Deduct for Actual Damages Beyond Normal Wear and Tear
Deductions must be for actual, documented damages beyond normal wear and tear. Receipts or invoices must accompany the itemized statement. Deductions for normal wear and tear are not permitted.
Chicago Security Deposit: Do's and Don'ts
Do
- Open a dedicated, federally insured interest-bearing savings account for each deposit
- Send written bank disclosure within 14 days of receiving the deposit
- Document the unit's condition with photos and a move-in checklist signed by the tenant
- Pay or credit annual interest to the tenant
- Return the deposit within 30 days of move-out
- Attach receipts and invoices to any itemized deduction statement
- Keep copies of all written notices for at least 3 years
Don't
- Commingle the deposit with your operating funds or personal account
- Fail to disclose the bank account within 14 days
- Deduct for normal wear and tear (minor scuffs, small nail holes, carpet wear)
- Miss the 30-day return deadline — even by one day
- Provide a deduction statement without receipts or invoices
- Forget to include accrued interest with the deposit return
- Ignore a tenant's forwarding address when mailing the deposit
Frequently Asked Questions
Altus Handles Security Deposit Compliance for You
RLTO security deposit compliance is one of the most common sources of landlord liability in Chicago. Altus Property Partners manages all deposit handling, disclosures, and returns in full compliance with the RLTO.