Posted September 13, 2016 2:16 PM
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Strict landlord-tenant law marks 30th year

By Emily Donovan
Law Bulletin staff writer

A city ordinance aimed at bolstering tenant’s rights against their landlords turns 30 this month.

Tenants groups across the city found the milestone for the Residential Landlords and Tenants Ordinance to be a cause for celebration — even as they mount a defense against a landlord-driven effort at City Hall to lessen penalties against noncompliant property owners.

Lawrence Davis Wood, the director of LAF’s housing practice group, said on Thursday — the formal anniversary date — that the ordinance was “an incredibly important document.”

“I think the Chicago tenants are lucky to have it,” Wood said.

Since 1986, the ordinance penalizes landlords who refuse to return security deposits, impose excessive late fees, lock tenants out or evict tenants in retaliation for complaining about poor living conditions. It also allows tenants to withhold rent if their landlord is failing to maintain the premises.

The ordinance doesn’t apply to owner-occupied buildings with six or fewer units.

“It’s designed to apply to landlords who are in the (real estate) business,” Wood said.

Michael Pensack, the Illinois Tenants Union executive director and an attorney, said the ordinance’s roots begin in 1966 when the Rev. Martin Luther King Jr. demanded tenants rights as part of the Chicago Freedom Movement.

Chicago’s ordinance was drafted by former LAF attorney William P. Wilen, and Henry G. Rose, now a law professor at Loyola University Chicago School of Law, and passed the city council on Sept. 8, 1986.

Pensack said it passed with the support of Harold Washington, the city’s first black mayor, and was helped by aldermen’s wariness to vote down a measure designed to protect tenants during an election season.

“We wouldn’t have it without the civil rights movement,” Pensack said.

The ordinance protects all applicable tenants, but Wood said low-income tenants experienced the worst abuses before the ordinance came into effect. The ordinance empowered those low-income tenants to force landlords to pay for their attorney fees.

“Low-income tenants especially don’t have the knowledge to go into court, but no attorney is going to take the case unless they’re going to get paid,” Wood said.

Pensack said there’s a lot more lawyers who take on tenants’ cases today than there were 30 years ago.

Previous laws only forced landlords who wrongfully withheld the tenants’ security deposits to return the deposits The ordinance forces landlords to award tenants two times their security deposits plus interest for damages.

“That was the great thing about the ordinance: It has some teeth,” Wood said.

Without mandatory financial penalties, Wood said he thinks the ordinance would rarely be enforced.

“There are a good number of unscrupulous landlords and they are going to follow the law only if they realize that there’s a serious penalty for violating it,” Wood said. “And that’s what the RLTO provides.”

However, Brian Bernardoni, senior director of government affairs for the Chicago Association of Realtors, wants to leave that penalty to a judge’s discretion.

The association has been lobbying for an amendment to the ordinance that would change “the tenant shall be awarded damages” to “may be awarded damages.” Bernardoni said that will provide judges leeway in determining the amount of fault between tenant and landlord.

Lack of judges’ discretion in enforcing the RLTO drawn frustration from the bench before.

In 2014, the 1st District Appellate Court heard a case involving a tenant who sued after the landlord deducted $223 from her security deposit to fix a dent — but did not provide the renter with an itemized statement of damages and receipts within the RLTO’s required 30-day window.

At a bench trial the judge found in the tenant’s favor, requiring the landlord to pay back the withheld $223, plus double the initial security deposit amount and attorney fees — a sum of $8,063.

The majority in Boyer v. Buol Properties, 2014 IL App (132780), affirmed the award. But in his one-page dissent, Justice James Fitzgerald Smith took aim directly at the RLTO.

“This case is the perfect example of what is wrong with the Chicago Residential Landlord and Tenant Ordinance,” Smith wrote. “It was designed with good intentions, but here, one can clearly see how a landlord can be outmaneuvered by a Machiavellian tenant and a trial judge who fails to make findings based on the evidence presented.”

The current RLTO proposal was introduced Sept. 24, 2015, and has been sitting in the council’s Committee on Housing and Real Estate since.

Pensack said giving judicial discretion on the ordinance is an “absolutely terrible” idea.

“If you give (judges) discretion, it won’t be enforced at all,” Pensack said. “The thrust of the legal profession is to protect property, not to protect tenants.”

With the ordinance as strict as it is, Bernardoni said his group advises a landlord who has a tenant file a claim against them to settle the case.

“Ninety-five percent of the professional landlords out there will open up their checkbook to end it,” he said. “It doesn’t go to court, they’ll just settle it. Why? Because there’s strict liability and no judicial discretion.”

Bernardoni said tenant attorneys are taking advantage of the ordinance’s strict liability. Lawsuits get more and more expensive when the landlords don’t settle, as the attorney may increase his or her fees if they are able to put together a class-action lawsuit with other tenants in the building.

For example, three Chicago tenants filed class-action lawsuits against their apartment and property management companies in February alleging the companies did not notify them about the ordinance by supplying them with a copy when they signed leases. The ordinance requires landlords who fail to do so to pay each tenant $100.

Bernardoni said those types of class-action lawsuits are filed not because tenants were seriously aggrieved and need financial relief, but because the attorneys representing the plaintiffs want to cash in.

Pensack doesn’t think class-action lawsuits that benefit the tenant lawyers more than the individual tenants are bad. He said it’s easy to pick up or print out and staple on a copy of the ordinance to the lease that big landlord companies don’t have an excuse.

“Even if it’s done by lawyers to make money, it also puts landlords on their toes,” Pensack said.

Bernardoni said if landlord companies pay huge attorney fees, they might pass those expenses on to their future tenants by raising the rent.

Pensack called that argument “total bulls--t.” He said landlords will raise the rent as high as they can and that they don’t need expenses like paying past tenants’ attorney fees to justify it.

“In any business, if your customers aren’t going to pay for it, you can’t charge it,” Pensack said.

Pensack said most Chicago tenants rent from small landlords because so many buildings have become condominiums and there aren’t enough tenants who rent from individual condominium owners to create a large class-action lawsuit.

However, since the ordinance applies the same strict rules and penalties to a small landlord who rents out their condominium as it does to the large real estate companies, Bernardoni said it makes it harder to be a small landlord in Chicago.

The association’s proposed changes to the ordinance is sponsored by 13 aldermen.

No vote is currently scheduled, but Bernardoni expects it to receive an up-or-down vote soon. The group introduced the same proposal in 2013, but it was never called for a vote.

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