Security Deposit Vs Move-In Fee

[Tony Freeman]

It's really important when you become an investor to know your rights as an owner as well as the rights of the tenants. In Chicago, the law favors a lot more for the tenant's rights than the owner's rights. Because of this, I never suggest to my clients to charge a security deposit and instead suggest they charge a non-refundable move in fee. 

For starters, a security deposit can definitely intimidate a good amount of renters from renting with you, even the most qualified. Secondly, in Chicago, if there is any mistake at all made by the owner when it is time to return the deposit back to the renters, the renters legally have the right to sue you as the owner for up to 4 times the amount of the deposit. For this reason, I suggest my clients to charge a non-refundable move in fee to help rid you of that possible nightmare. Non-refundable move in fees are also a lot less intimidating to renters as the amount is significantly less than a security deposit. Even if you run into a situation where your tenants have damaged things, you still legally have a right to sue the tenants for the damages with a non-refundable move in fee. 

Long story short it is just a lot safer and you don't have that potential headache down the road. 

[Jonathan Klemm]

@Tony Freeman - I am in total agreement.  If you are a landlord here in Chicago it's not worth the risk of holding security deposits.  We charge a move-in AND move-out fee.  I believe the max you can charge is 50% of one month's rent, but maybe @Mark Ainley can confirm?