Illegal late fees under Chicago leases

The NBC affiliate in Miami, Florida relates the story of a landlord who lit a tenant on fire after the tenant failed to pay rent on time.  Clearly, that sort of activity is not an appropriate penalty for failing to make timely payment of rent!

What can a Chicago landlord do when a tenant fails to pay rent on time?  If the rental agreement is governed by the Chicago Residential Landlord Tenant Ordinance, the answer is easy.  Section 5-12-140(h) provides that

no rental agreement… may provide that a tenant shall pay a charge, fee or penalty in excess of $10.00 per month for the first $500.00 in monthly rent plus 5% per month for any amount in excess of $500.00 in monthly rent for the late payment of rent

So, basically, the CRLTO puts a cap on a lessor’s late fees.  If the tenant’s monthly rent is $1000, then the maximum late fee that can be charged is $35.00.  That’s a total, not a daily amount nor an amount that compounds or increases over time.  Thus, late fees of, say, $10 per day or 5% per month will be illegal and unenforceable unless, perhaps, they are capped at the ordinance late fee limit (I can’t think of why a landlord would want to do that, but I suspect it would be legal).

What happens if a landlord has an illegal late fee provision in a lease?  Well, the CRLTO indicates that such a provision is unenforceable.  The ordinance goes on to provide that if a landlord attempts to enforce an unenforceable late fee provision, the tenant may recover an amount equal to two months rent.

About Richard Magnone

Co-founding member of Reda | Ciprian | Magnone, LLC, attorney at law and Illinois licensed lawyer since 1996.
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