Paul Bernstein, Attorney at Law
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On Chicago Tenants' Rights - Chapters

By: Paul Bernstein, Attorney At Law

Paul Bernstein, Esq. 1998, All Rights Reserved


On February 11, 1998, the First District Illinois Appellate Court came down with a very important decision affecting almost all apartment dwellers in Chicago. The case is titled: "George Namur and Matthew Tolf vs. The Habitat Company" and is consolidated case numbers 1-97-1034 and 1-96-4288.

The facts in the Namur case are basically as follows: In December, 1991, Namur gave a security deposit to Habitat for an apartment covered by the Chicago Residential Landlord and Tenant Ordinance ("RLTO") for the period from February 1, 1992 to March 31, 1993. When Namur vacated the apartment, he got his security deposit back, with interest; however, Namur still filed a lawsuit on September 16, 1994, alleging the commingling of his security deposit money with other monies of the landlord. A provision barring the commingling of security deposit monies of tenants with other money of the landlord is included in the RLTO to protect against tenants' security deposit money from being taken by creditors of a landlord. In order to give landlords the incentive to comply with the requirements of the RLTO (Section 5-12-080(a) of the RLTO) if such allegations are found to be true, tenants are entitled to damages in an amount equal to two times the amount of the security deposit plus an award of attorney's fees and costs.

In addition, a second "count" was also alleged by Namur, namely, that the landlord had failed to attach a Summary of the RLTO to his lease as required by the RLTO and Namur asked for the damages against the landlord as provided by the RLTO for such violations, in the sum of $100.00.

In the Namur case, Habitat filed a motion to dismiss both counts of Namur's complaint on the legal theory that the RLTO's provision for damages equal to two times the amount of the security deposit (and $100.00 for failure to attach the Ordinance Summary) were both a "penalty" and that therefore there was a two-year statute of limitations, meaning that an aggrieved tenant had to file a lawsuit within two years after the cause of action accrued and failing to do so, would be barred from making any recovery. In that Namur did not file his lawsuit within two years after he paid Habitat his security deposit and the receipt of his lease without the summary attached, Habitat's lawyers argued that the lawsuit was barred by the said two-year statute of limitations. Namur's lawyers argued that the word "penalty" is not used in the RLTO and that the word "damages" as used in the RLTO meant just that, "damages" and that therefore a five-year statute of limitations controlled and that Namur's case was therefore timely filed.

The trial court ruled in favor of Namur on the statute of limitations issue and Habitat appealed.

The appellate court reversed the trial court and stated: "A statute is penal if it imposes automatic liability for a violation of its terms and if the amount of liability is predetermined by the statute and imposed without actual damages suffered by the plaintiff....a statute is remedial where it imposes liability only for actual damages resulting from a violation." In that the appellate court found the two-times damage provision for commingling is a penalty, as is the $100.00 provision of the RLTO for failure to attach a summary of the RLTO to a lease, that therefore a two-year statute of limitations applied. In accordance with that reasoning, Namur's lawsuit was barred and a judgment to be entered in favor of the landlord.

The court also went on to discuss another issue. Suppose the tenant was not aware that the landlord had commingled the tenant's security deposit with other monies of the landlord and not aware that the landlord was required to attach a summary of the RLTO to a lease. Could the tenant argue that the statute of limitations was "tolled" (the beginning date of the two year statute would not begin) until the tenant had knowledge of the landlord's failure to comply with the law? The court responded to this issue with the following language: "Also, because of strict application of penalties for violations of municipal ordinances, perhaps the discovery rule is not applicable in these types of ordinances. However, we do not make a ruling on this point."

The effect of this appellate court decision on Chicago apartment dwellers covered by the RLTO is significant in many respects.

Your author has seen cases where the tenants' security deposits were lost because the landlord had commingled the tenants' security deposits with other monies of the landlord. Usually, this happens if the landlord goes out of business or runs into financial difficulties and those funds are levied upon by creditors of the landlord. Accordingly, rule number one for all tenants is to determine whether or not your security deposit money is in a separate account for the sole benefit of tenants, separate and apart from any other money of the landlord. Tenants should make immediate inquiry of their landlord in such regard.

The Namur decision has other, far reaching consequences. Suppose you rented an apartment and never received interest on your security deposit. The Namur case tells us that you have two years from the date when the interest was due to sue for the damages (two times the amount of the deposit, plus attorney's fees and court costs). It is to be kept in mind that the provisions in the RLTO for such substantial damages of two times the amount of the security deposit for failure to pay interest on such deposit (plus attorney's fees) were inserted into the RLTO to give tenants and attorneys for tenants an incentive to file such lawsuits and to thereby make landlords comply with the law. Indeed, without such provisions, it is not very likely that a tenant would sue to recover the modest amounts of interest now allowed under the RLTO.

The current rate of interest is based on the average of passbook savings accounts, insured money market accounts and six-month certificates of deposits from commercial bank having its main branch located in the city of Chicago and having the largest total asset value. The current rate on security deposit interest, as of July 1, 1997, is 3.42% and for prior years was 5.00% as then provided by the RLTO.

There are also similar two-times damage provisions for the failure to promptly return a security deposit.

It is imperative that all tenants in Chicago whose leases are governed by the RLTO be aware of this important decision. Tenants have two years after an event giving rise to an action for damages takes place to file a lawsuit against their landlord for such damages.

Do you know where your security deposit is? Have you been paid interest on your security deposit? If you have already vacated your apartment and are entitled to the refund of your security deposit, has more then two years passed? Did you get a copy of a summary of the RLTO when you signed your lease? Be aware of this new case and the two-year limitations period. Review the facts of your case and take such action as you believe appropriate in a timely fashion or forfeit certain of your rights under the RLTO.

Another recent decision of the Illinois Appellate Court (December 18, 1997) in the case of "American National Bank, etc., by METROPLEX, INC., as Agent, v. JOHN POWELL, (case number 1-96-3870) reaffirms the purposes and policy of the RLTO and explains in detail certain provisions of the RLTO.

John Powell ("Powell") has been a long-term tenant in a Chicago high-rise apartment. Powell sent his landlord a written demand that the landlord make certain repairs within 14-days of the receipt of his demand by the landlord, else, Powell was going to reduce the amount of his monthly rent as provided for under section 5-12-110(d) of the RLTO. Powell subsequently alleged that certain of the repairs were not made and therefore Powell deducted certain sums from his usual rental payments. Metroplex, almost immediately, filed an eviction action against Powell.

The trial judge found that Powell had erred in his attempts to follow the provisions of the RLTO in that, although Powell did send a letter to his landlord demanding that repairs were to be made within 14-days after receipt of the letter, that Powell subsequently remitted his first "reduced" rental payment to the landlord before the full 14-days had expired and therefore, in that Powell had not allowed the landlord the requisite time under the ordinance, the deduction of part of the rent was not proper and that, accordingly, the landlord could properly evict the tenant. An order was so entered by the trial court, evicting Powell.

As counsel for Powell, I appealed that ruling to the Illinois Appellate Court and on December 18, 1997, the Illinois Appellate Court reversed the eviction order of the trial court. The complete decision makes for very interesting reading and here I report on only a portion of the court's pronouncements.

Powell, in what we lawyers call an "Affirmative Defense", asserted that the RLTO prohibited Metroplex from filing a forcible entry claim against Powell merely because he invoked his rights as a tenant. One of the protected actions of a tenant under the RLTO is to request that the landlord make repairs to the premises as required by a building code. Powell's 14-day letter to the landlord was clearly such a request. The RLTO makes it clear that a "landlord may not knowingly terminate a tenancy, decrease services, bring or threaten to bring a lawsuit against a tenant for possession or refuse to renew a lease or tenancy because the tenant has in good faith taken certain protected actions under the RLTO, one of which is requesting repairs to the premises.

The RLTO goes on to provide that "In an action by or against the tenant, if there is evidence of tenant conduct protected herein within one year prior to the alleged act of retaliation, that evidence shall create a rebuttable presumption that the landlord's conduct was retaliatory."

The court stated at page 16 of the slip opinion: "Although we conclude Powell did not comply with the RLTO's rent withholding provision, we disagree with the trial court dismissal of Powell's retaliatory eviction affirmative defense. Considering the dearth of relevant case law construing the rent withholding provision of the RLTO, Powell's request for repairs and his withholding of rent create a 'good faith' fact issue. Conduct protected by the ordinance creates a presumption of retaliation."

The Court concluded that there were triable issues of fact and reversed and remanded the case to the trial court accordingly.

Lessons to be learned by the Metroplex v. Powell decision, among others, are as follows;

1. If you have legitimate complaints against your landlord for failure to make repairs as required by the RLTO and the Chicago Building Code, be certain to confirm your verbal requests for repairs with letters to your landlord. Be certain to keep a copy of your letters.

2. Sometimes issues come up as to whether or not a letter was actually mailed to your landlord or if mailed, whether the landlord received the letter. A good way to deal with this concern is to take your envelope to a local United States Post Office and request a "Certificate of Mailing" from the post office....this is not the same as "Certified Mail, Return Receipt Requests", which could be refused by your landlord. A "Certificate of Mailing" is an acknowledgement by the post office that on the date in question you mailed an envelope to a particular person at a particular address. If the landlord's name and address are properly stated on your letter and envelope, the landlord would have a difficult time denying receipt of your letter(s).

3. If you are serving your landlord with a 14-day request for repairs, I strongly urge you to take a variety of safety measures: First, mail the letter early in the month, say, on or before the 5th or 6th of the month. That way, you will be assured that the mail gets to the landlord before the 14th of the month. Next, try to confirm, verbally by calling the landlord, that the landlord did get your letter - be cooperative and help the landlord schedule dates for repairs to be made and note on your copy of the letter the date on which the landlord acknowledged receipt of your 14-day letter. Next, be certain not to tender reduced rent, if appropriate, until the first day of the month that follows the month in which you gave the 14-day notice to your landlord.

4. Difficult decisions relate to the determination of what are building code violations and how much to deduct from the rent if the landlord does not comply with your rightful demands. I strongly urge readers to communicate with a local tenants' rights or community-based organization in regard to these difficult issues. Such organizations are experienced in such matters and can and will generally assist with such efforts.

5. Be certain that your complaints are valid and not trivial - a one-inch "hair-line" crack on a wall might be a code violation but will not be seen as warranting a rent-reduction by any judge in the eviction division of the Circuit Court of Cook County.

6. Be certain you understand the RLTO and that you follow the RLTO's provisions and requirements. Again, by working with a local community-based organization, you should be able to work through the requirements of the RLTO.

Paul Bernstein
Attorney At Law
333 E. Ontario St.
Chicago, IL 60611
(312) 951-8451
Fax: (312) 280-8180


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