What is the difference between a Security Deposit and a Move-in Fee?
Renting an apartment in Chicago can be a taxing process. From finding a reliable tenant to drafting a lease that complies with local ordinances, there are so many elements that must be considered. One question that typically comes up is, what is the difference between a security deposit and a move-in fee?
Security deposits are typically requested by landlords and property managers as a predetermined deposit that renters must pay prior to moving in. The deposits are typically used by the landlord in two specific instances:
If a tenant causes damages to the apartment beyond normal wear and tear
If a tenant fails to pay rent or fees, and owes the landlord
Once the renter moves out and the tenancy is over, the landlord may deduct the amount needed from the deposit to cover any costs of damage or any outstanding rent or fees owed. If the renter has not caused any damage and does not owe any rent, they will receive the full refund of the security deposit.
Security deposits are highly regulated by the Chicago municipal code, and landlords are required to hold security deposits in a disclosed, separate account in which they must pay interest to the tenant within 30 days from the end of the lease year. If the landlord does not comply with regulations, it is possible that the renter may receive up to 2x the amount of the security deposit.
t is becoming less common for landlords to request a security deposit from tenants due to the risk associated with mishandling the money in violation to the Chicago Residential Landlord Tenant Ordinance.
Move-in fees are a completely separate cost that landlords charge to new renters moving in. Unlike security deposits, move-in fees are not regulated and typically are non-refundable. The fees are used to cover the cost of small touch-ups and small changes to an apartment once tenancy is over, or possibly cleaning expenses.
Move-in fees are set by landlords and are typically between $300-$500. Renters that wish to capture an idea of what a move-in fee for a prospective apartment may calculate about 30% to 50% of monthly rent Anything more than that could start to look like a security deposit, and not pass muster under the Chicago ordinance.
Move-in fees and security deposits vary in many ways, however, most landlords require one or the other. It is important to keep this in mind when drafting your apartment listing and your lease.If you have any questions or need further assistance, contact Kershner Sledziewski Law today.