Overview
Illinois security deposit laws are governed by the Security Deposit Return Act (765 ILCS 710) and the Security Deposit Interest Act (765 ILCS 715). Illinois law varies significantly based on property size, and cities like Chicago have additional local requirements that are often stricter than state law. Security deposit management software helps property managers navigate these layered requirements.
Maximum Security Deposit
Illinois has no statewide limit on security deposit amounts. Landlords may collect any reasonable amount.
Note: While Chicago's Residential Landlord and Tenant Ordinance (RLTO) imposes additional requirements, it also does not set a specific cap on deposit amounts. Market conditions typically keep deposits at one to two months' rent.
Return Timeline
Illinois has two separate deadlines under 765 ILCS 710/1:
Itemized Statement: 30 Days
If making any deductions, landlords must provide a written itemized statement describing each charge within 30 days after move-out.
Deposit Return: 45 Days
The remaining balance of the security deposit must be returned within 45 days after move-out.
Interest Requirements
Interest requirements depend on property size (765 ILCS 715):
Properties with 25+ Units
Landlords must pay interest on deposits held for 6 months or more. The interest rate is set annually based on the passbook savings rate at Illinois' largest commercial bank.
- Interest must be paid within 30 days after each 12-month rental period
- Payment can be in cash or as a rent credit
Properties with Fewer Than 25 Units
No interest requirement at the state level. (neighboring Indiana—see Indiana security deposit laws.)
Chicago Properties
Chicago landlords must hold deposits in federally insured, interest-bearing accounts and pay accrued interest within 30 days after each 12-month period. The 2025 minimum rate is 0.01%.
Allowable Deductions
Landlords may deduct for:
- Unpaid rent
- Damages exceeding normal wear and tear
- Unpaid utility bills
- Lease violations resulting in costs
Landlords cannot withhold for normal wear and tear, deterioration from ordinary use, or typical aging of the property.
Penalties for Non-Compliance
Under 765 ILCS 710, if a court finds the landlord:
- Refused to supply the itemized statement, OR
- Supplied the statement in bad faith, OR
- Failed to return the deposit within the time limits
The landlord may be liable for:
- Twice the amount of the security deposit due
- Court costs
- Reasonable attorney's fees
Common Compliance Questions
What counts as "normal wear and tear"?
Normal wear and tear includes minor scuffs on walls, slightly worn carpet in high-traffic areas, small nail holes from hanging pictures, and faded paint from sunlight. It does not include large holes in walls, stained or burned carpet, broken fixtures, or damage from pets. When in doubt, document the condition at move-in with dated photos.
How should I document the unit's condition?
Complete a detailed move-in checklist with the tenant, noting existing damage, appliance conditions, and overall cleanliness. Take timestamped photos or video of every room. At move-out, repeat the process. This documentation protects both parties and makes deduction decisions defensible if disputed. Request a demo to see how Passive streamlines this workflow.
Can I deduct for unpaid utility bills?
Only if your lease specifically allows it and the utilities are in your name. If utilities are in the tenant's name, contact the utility company directly—they have their own collection processes. Never make unauthorized deductions, even for amounts you believe the tenant owes.