Move-out inspections in Illinois and bad faith

movingvan“Moving Week” ends today with a final installment about move-out.  If you have ever seen me at a speaking engagement on landlord-tenant law, you have probably heard me opine about what I think is a great way to manage risk when a tenant moves out.  I think landlords should go out of their way to make sure that they have an opportunity to conduct an in-person move-out inspection walk-through with a tenant.  Personal contact is the key.  The landlord is there.  The tenant is there.  Any damage or lack of damage is mostly obvious and it is pretty darn difficult for a tenant to claim that the door is not broken when both the landlord and the tenant are standing in front of the broken door!

That brings up an interesting question.  Must an Illinois landlord do a move-out inspection with a tenant?  Can a landlord just check out the rental unit after the tenant has vacated?  An Illinois second district appeals court decision suggests that this might not be okay.

In Ikari v. Mason Properties 314 Ill.App.3d 222, (2nd Dist. 2000). a case of first impression brought pursuant to the Illinois Security Deposit Return Act (Act), two Northern Illinois University graduate students argued that their landlord had acted in bad faith by failing to provide for an exit inspection when a move-in inspection had been provided at the inception of the lease after the landlord provided a statement of damages and deducted money from the tenants’ security deposit.  The tenants argued that the landlord’s failure to provide the inspection was in bad faith and violated the Act. The trial court agreed that  the landlord had acted in bad faith by not providing an inspection and reasoned that the landlord  had provided an inspection prior to the inception of the first lease and that an exit inspection would have provided the tenants with the opportunity to correct any defects found in the apartment.

The landlord appealed the trial court finding.  The appellate court indicated that the trial court had determined the landlord had acted in bad faith under the Act by not providing a move-out inspection but pointed out that the proper inquiry should have been whether or not the landlord had acted in bad faith in providing an itemized statement of damages.  The appellate court ruled that the landlord’s itemized statement was not provided in good faith.  The court went on to say that the trial courts finding of bad faith for landlord’s failure to provide for a move-out inspection “intimate[s] a determination that [the landlord] supplied the itemized statement in bad faith”.

In the end, the court upheld the trial court’s finding of bad faith.  The landlord argued that the lease did not provide for a move-out inspection and the tenant argued that even if that was the case, the failure of the lease to provide for such an inspection would have been contrary to public policy, the Act, and therefore was void.  For procedural reasons, the appellate court did not consider that argument.

Nonetheless, Illinois landlords need to be careful if a tenant requests a move-out inspection.  While the case does not apply directly to the Chicago, Evanston, Oak Park, or other local municipal ordinances, landlords need to consider whether or not it would be deemed bad faith to deny a move-out inspection considering the Ikari ruling.  After all, a landlord might be able to better argue the point about the absence of a move-out inspection provision in the lease.  However, most landlords don’t want to be the test case – strike that – most landlords don’t want to pay to be the test case for a legal theory!

So, landlords can kill two birds with one stone by doing a walk-through with a tenant at the end of a lease term.  They can help to prevent a bad-faith argument by their tenant and they get to review the condition of their rental property in the presence of their tenant.  Sounds like a pretty good idea to me.

About Richard Magnone

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