All of the Illinois security deposit laws follow the Illinois Compiled Statutes - Chapter 765, which can also be cited as the Security Deposit Return Act.

A security deposit is meant to cover many different items once the tenant vacates the property, such as unpaid rent, utilities, cleaning costs, and reasonable attorney's fees in case of a dispute.

The following page will discuss the entirety of the Illinois security deposit law, as well as other critical things that Illinois landlords must keep in mind before signing a rental agreement with their new tenants.

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  • Maximum Charge - There's no limit.
  • Return Deadline - Up to 30 or 45 days once the tenant vacates the property, depending on the circumstances.
  • Return Penalty - Up to two times the original amount of the tenant's security deposit, the cost of the legal suit, and any additional attorney fees/court costs.
  • Allowed Deductions - Unpaid rent, repairs for damages that exceed regular wear and tear, and any other additional charges stated in the original lease agreement.

Maximum Deposit

Regarding a tenant's security deposit in Illinois, landlords have quite some benefits. Overall, the state doesn't have any limits regarding how much a landlord can charge for the security deposit.

In most cases, it's acceptable for an Illinois landlord to charge up to one- or two-month's rent. In case the landlord owns a mobile home park, they can charge up to one month's rent.

While landlords could charge as much as they want for the tenant's security deposit, they should always choose a reasonable amount. Charging extremely high amounts will only cause the landlord not to get any tenants, as they will likely go to someone who charges less.

Regarding payments, landlords in Illinois can accept both the payment for the first month's rent and the security deposit in a single transfer or check, whichever feels more comfortable. The landlord has up to five business days to accept the funds from the security deposit and transfer them into a federally insured, interest-bearing account.

Pet Deposits

According to Illinois security deposit laws (and the state laws in general), landlords can ask for additional pet deposits besides the original security deposit funds, as long as they included a clause in the original lease.

However, landlords cannot charge pet deposits to people with disabilities that use a service animal for emotional support. Otherwise, that could count as discrimination under the guidelines of the Federal Fair Housing Act.

On the other hand, if the service animal causes any kind of damage to the landlord's property, the landlord can send them an itemized statement with the damages (as well as the estimated or actual cost of the repairs), and the tenant will have to pay for them.

Allowable Deductions

The Illinois security deposit guidelines surrounding deductions are quite simple, as they're similar to those in other states.

Keep in mind that you can only use the security deposit funds when the lease ends or if you terminate the tenant. Generally speaking, landlords can use an Illinois security deposit to cover the following:

  • Unpaid rent, utilities, and other services.
  • Cost of repairs for damages that exceed regular wear and tear.
  • Any additional charges specified in the original lease agreement.

Landlords in Illinois have the legal right to request tenants to leave the unit in the same condition it was when they moved in. However, they can only use the funds of the security deposits for damages beyond normal wear and tear. We'll cover the difference between regular damage and excessive damage below.

Wear and Tear

One of the areas where landlords and tenants get confused is in calculating damages. Once the tenant moves out of the property, the landlord must send an itemized statement with damages, as well as the estimates/actual cost for the repairs per paid receipts. If the landlord fails to send this itemized statement, they may forfeit their right to get the security deposit funds.

However, landlords may not always be able to use the security deposit to cover damages, as regular wear and tear doesn't fall under "reasonable damage to the property."

Below, we'll explain the difference between regular and excessive damage so that you can have a better idea of what to expect in your next lease experience:

Regular Wear and Tear

It refers to deterioration within the property that happens due to regular use. As long as the deterioration happened without the tenant's negligence, carelessness, or abuse, it counts as regular wear and tear.

All properties in Illinois are expected to get damaged as the years pass. Some of these damages include loose handles, fading paint, stained fixtures, dirty grout, and more.

In these cases, landlords cannot use the security deposit funds to pay for these damages, as they weren't the tenant's fault.


On the other hand, "damage" refers to any destruction caused to the property due to the tenant's abuse, negligence, or carelessness. It also refers to any damage that reduces the property's normal function, value, or usefulness.

Some factors that count as excessive damage include heavily stained fixtures, broken tiles or windows, holes in the wall, or mixing fixtures.

In these cases, landlords are entitled to send an itemized statement to seek repairs from the tenant. There, they could use some (or all) of the security deposit to cover everything.

If you're still confused about what constitutes each type of damage, you could talk to a legal expert and tell them about your case. An experienced attorney will be able to determine whether the damage sustained by your property counts as regular deterioration or if it was caused by the tenant's negligence.

Holdings Deposits

Generally speaking, all Illinois landlords are required by law to deposit the security deposit in a separate bank account approved by the state. If the landlord refuses to deposit such security deposit in the required account, they may face legal consequences and penalties.

As mentioned previously, landlords have up to five business days to accept the security deposit funds and store them in a federally insured, interest-bearing account.

Returning Deposits

Here, the return date for the security deposit can be either 30 or 45 days, depending on the case.

In most cases, an Illinois landlord has up to 45 days once the tenant left the property to return the security deposit. Landlords can either send written notice personally or via postmarked email directed to the tenant's forwarding address or last known address in general.

However, if the landlord wants to make any deductions on the security deposit, they have up to 30 days from the date the tenant leaves the rental unit to give them an itemized statement showing all damages that exceeded normal wear and tear and the estimated or actual costs of the repairs per paid receipts.

As with the previous case, landlords can send a written notice with this itemized list personally or via postmarked mail or a verified electronic mail address. It's vital to note that, if the tenant doesn't provide the landlord with a verified email address or a last known address, the landlord won't be liable for any damages and will be able to use the security deposits to pay for repairs.

Writing the Itemized Statements

According to the Security Deposit Return Act, you can outline the costs on your statement in the following way:

  • Once the repair costs get paid, the landlord must specify the damages that got covered and the receipts for these services. Landlords can also include a copy of the receipt.
  • Landlords can choose to do the repairs themselves or by hiring an employee. In this case, they can include a reasonable cost clause instead of the receipts and actual costs for repairs.
  • In some cases, the landlord may not be able to provide actual costs for the repairs. If they can only include estimates, they have up to 30 days from sending written notice to provide the receipts with the final costs.
  • Landlords who charged specific fees in the original lease (like cleaning fees) should include a copy of said part of the lease agreement that references that clause.
  • If the landlord cannot provide receipts to the tenant, and it wasn't their fault, they must still provide any evidence that shows they used to cover the damages, as well as a sworn statement that outlines the reason why there are no receipts. This goes according to the Illinois Security Deposit Return Act.

Are There Any Exceptions?

All of the penalties mentioned on this page only apply to rental agreements involving five or more units. Landlords who have less than five or more units will have no specific time frames, at least according to the state.

What Happens If the Landlord Doesn't Return the Deposit on Time?

Landlords who don't send written notice to their tenants within 30 days (or 45 if they don't make any deductions) will get penalized. Depending on the case, they could have to pay up to two times the amount of the security deposit, court costs, and attorney fees.

Tax Filing

How you will treat your security deposit regarding taxes will depend on whether you keep some of it or not. Keep in mind that a security deposit won't get considered income when you receive it. However, if you no longer have an obligation to return your security deposits, you must report any remaining funds as income in the year they were forfeited by the tenant.

Overall, if the tenants forfeited their security deposits due to a breach of the lease or to cover unpaid rent, landlords must report that amount as income on the date they got forfeited. Moreover, if the landlord used security deposits to cover expenses chargeable to it, they must include the particular amount used for repairs as expenses. In case the landlord didn't include those repairs as expenses, they don't have to report them as income.

In some cases, landlords and tenants can agree to use the security deposits to pay for the last month's rent. If this happens, the landlord must report that amount as income as soon as they receive it.

Other Rules

Interest Payments

According to the Security Deposit Interest Act, landlords who have 25 or more rental units must pay interest on security deposits held for over six months. Otherwise, they won't have to pay interest to the tenant.

The Annual Percentage Yield, as of January 2021, was 0.01%. This means that the landlord must pay interest in the amount of $5.00 or more in cash or any form of credit toward the rent. This payment must get done within 30 days after the end of every yearly lease period.

Additionally, the interest rate for landlords must be the same as the interest paid by the state's largest commercial bank. This must be saved on minimum deposit savings accounts.

Any earned interest that wasn't credited to minimum deposit savings accounts at the end of the lease must get paid to the tenant. Landlords who fail to pay or credit the interest mentioned here will get penalized. They will have to pay an equal amount to the security deposit, court costs, and attorney's fees.

New Property Transfers

In case the leased unit gets sold or transferred to someone else during the term, the new landlord will be liable for everything surrounding the security deposit.

The old landlord will still be liable for the security deposit as long as they don't transfer the funds to the new manager alongside the tenant's name and address.

Once the new landlord receives the funds and the tenant's information, they have up to 21 days to send written notice that states they received the corresponding deposit.

Bottom Line

The Illinois security deposit law can get quite confusing for some landlords. If an Illinois landlord fails to comply with any of the clauses shown on this page, they could have legal issues with their tenant in the future.

Aside from understanding the entire security deposit laws for this state, landlords must also be aware of the Illinois landlord-tenant laws. As long as everyone complies with Illinois law in its entirety, you can ensure a safe, effective, and more comfortable leasing experience.

In DoorLoop, we have many resources for the Illinois state that you can start checking out today. Moreover, we have free and customizable templates you can download if you want to make the rental process much easier.

We hope this article has helped you understand the Illinois security deposit law and how you can ensure you comply with Illinois law at every step of the way.


Are There Any Limits for a Security Deposit in Illinois?

No. There are no state-wide limits for charging a security deposit. However, some counties and cities could impose limits on the landlord, so if you want to make sure, we suggest you check with your local ordinances.

Even if you don't have any limits for the security deposit, we suggest you don't charge an amount over two month's rent.

Can Landlords Use the Security Deposit as Last Month's Rent in Illinois?

Some landlords or tenants may want to use the security deposit to cover for monthly rent. While this is not common, landlords can make an agreement with the tenant to use the deposit funds to pay for rent.

What Is Considered Excessive Wear and Tear in Illinois?

Excessive wear and tear involve any damage caused to the property due to the tenant's negligence, carelessness, or abuse. This type of damage often decreases the property's value or functionality.

What Happens to Landlords Who Don't Return the Security Deposit on Time?

Any landlord who doesn't comply with the 30-45-day time frame for returning the deposit will lose the right to make deductions, and they could also be liable for penalties that include double the withheld amount, attorney's fees, and court fees.

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  1. 765 ILCS 710/ - Security Deposit Return Act. :: 2021 Illinois Compiled Statutes :: US Codes and Statutes :: US Law :: Justia
  2. Illinois Sublease Agreement
  3. Illinois Landlord-tenant Laws
  4. Illinois Roommate Agreements

David is the co-founder & CMO of DoorLoop, a best-selling author, legal CLE speaker, and real estate investor. When he's not hanging with his three children, he's writing articles here!