Most Chicago apartment buildings are governed by the city’s Residential Landlord and Tenant Ordinance (RLTO), which sets strict rules on security deposits, late fees, entry and notice that go well beyond Illinois state law. The main exception is an owner-occupied building with six or fewer units, so a typical 12-unit courtyard building or a non-owner-occupied six-flat is covered.
Which Chicago buildings fall under the RLTO
The RLTO lives in Chapter 5-12 of the Chicago Municipal Code. According to the city’s official RLTO summary, it covers most rental units in the city, with exemptions that include units in owner-occupied buildings of six or fewer units. That exemption matters in a city full of two-flats, three-flats and six-flats: the same building can be exempt while the owner lives there and fully covered the day it is sold to an investor who does not.
For larger multifamily owners the practical answer is simple: assume every unit is covered. The city also requires landlords to attach the official RLTO summary to every written lease, so a missing attachment is one of the first things a tenant’s attorney or a buyer’s due diligence team will look for.
Security deposit rules that trip up owners
Security deposits deserve the most attention, because the penalties are steep. Under sections 5-12-080 and 5-12-081, the city summary lists these requirements:
- Give the tenant a receipt for the deposit.
- Hold deposits in a federally insured, interest-bearing account at a financial institution located in Illinois.
- Pay interest each year at the rate set by the City Comptroller. The rate for 2026 is 0.01%, according to both the Chicagoland Apartment Association and Chicago rental platform Domu, and leases must include the city’s rate summary addendum.
- Provide an itemized statement of damage deductions within 30 days after the tenant moves out.
- Return the balance within 45 days of move-out.
A landlord who fails to comply can owe the tenant two times the security deposit plus interest. Because the interest rate is tiny, the interest itself is rarely the issue; the paperwork is. Missed receipts, commingled accounts and late itemizations are what turn a routine move-out into a damages claim.
Late fees, entry and lockouts
The RLTO also caps what a landlord can charge and how a landlord can act day to day:
- Late fees: no more than $10 per month on the first $500 of rent, plus 5% of any rent above $500 (section 5-12-140(H)). On a $1,500 unit, the maximum late fee is $60.
- Entry: two days’ notice is required for non-emergency access to a unit (section 5-12-050).
- Lockouts: locking a tenant out of a unit is illegal, and the city lists fines of $200 to $500 for each day a lockout occurs (section 5-12-170).
Owners who use generic Illinois lease forms should check them against these limits, especially after buying a building that comes with legacy leases.
Notice before raising rent or ending a lease
In July 2020, the City Council approved the Fair Notice Ordinance, which ties the required notice for a rent increase or a non-renewal to how long the tenant has lived in the unit:
- Less than six months: 30 days’ notice.
- Six months to three years: 60 days’ notice.
- More than three years: 120 days’ notice.
These periods do not apply once eviction proceedings have started for nonpayment or a lease violation. For owners, the 120-day tier is the one that requires planning. A rent increase on long-term tenants needs to be decided four months before the lease ends, which often means setting renewal pricing before the spring leasing season has shown where the market is.
Rent control is still off the table, for now
Chicago cannot cap rents on its own. The Illinois Rent Control Preemption Act (50 ILCS 825/5), in effect since 1997, prohibits any unit of local government from enacting or enforcing an ordinance that controls the amount of rent charged on private residential property. Bills to repeal the ban have been introduced in Springfield in recent sessions, including one that advanced out of a House committee in 2021, so the issue is worth watching. Today, though, there is no limit on the size of a renewal increase in Chicago; the RLTO and the Fair Notice Ordinance regulate timing and process, not amounts.
What this means for Chicago apartment owners
The RLTO rewards owners who treat compliance as an operating system rather than a one-time checklist. A few habits cover most of the risk:
- Use a lease package built for Chicago, with the RLTO summary and the current-year deposit interest addendum attached.
- Keep tenant deposits in a dedicated Illinois account and calendar the 30-day and 45-day move-out deadlines.
- Track each tenant’s move-in date so renewal and rent-increase notices go out on the correct 30, 60 or 120-day schedule.
- Audit late-fee language against the $10-plus-5% formula.
These rules also follow the building at sale. Leases, deposits and accrued interest transfer to the buyer, and a buyer will price any gaps into the offer. Our guide to selling a rental property with tenants in place covers how leases and deposits are handled at closing. For a broader view of the city, see our Chicago market page, or compare other Illinois apartment markets.
