Renting Out Your Property in Illinois: A Landlord's Guide

Familiarize yourself with the Illinois Compiled Statutes (765 ILCS 705 and 765 ILCS 710) and any local ordinances that apply to your specific location. Chicago, Evanston, and other municipalities have additional tenant protections beyond state law. Understanding these laws will help you avoid legal issues and ensure compliance throughout the landlord-tenant relationship.

Check with your local municipality about rental property business license requirements. Many Illinois cities require landlords to register their rental properties and obtain a business license. This may involve property inspections to ensure the unit meets local building and safety codes.

Complete the application for your local rental property business license. Include all required information about the property, ownership details, and contact information. Be prepared to pay any associated fees and schedule required inspections.

Create a comprehensive rental application that collects necessary information from potential tenants while complying with fair housing laws. The application should include employment verification, income information, rental history, and authorization for background and credit checks. Be careful not to include questions that could be considered discriminatory under federal or Illinois fair housing laws.

Create a legally compliant lease agreement that includes all required Illinois disclosures and terms. The lease should clearly outline rent amount, due date, lease term, security deposit details, maintenance responsibilities, and other important terms. Make sure it complies with state laws regarding security deposits, entry notice, and other landlord-tenant matters.

For properties built before 1978, federal law requires landlords to disclose known information about lead-based paint and lead-based paint hazards. You must provide tenants with an EPA-approved pamphlet on lead poisoning prevention and include specific disclosure language in the lease. Keep signed copies of these disclosures for at least three years.

Develop a detailed checklist to document the condition of the property before the tenant moves in and after they move out. This helps protect both parties and provides documentation for security deposit deductions if necessary. Include photographs or video documentation when possible.

Create a clear set of rules and regulations for tenants that comply with Illinois law. These may include policies on pets, smoking, noise, maintenance responsibilities, and other important matters. Ensure these rules don't violate any tenant rights under state or local law.

In Illinois, security deposits must be returned within 30-45 days after the tenant vacates (depending on whether there are deductions). For properties with 5+ units, security deposits must be held in a separate, interest-bearing account at a financial institution. Create a system for properly handling, documenting, and returning security deposits in compliance with Illinois law.

Prepare a receipt template for security deposits that includes the amount received, date of receipt, and information about where the deposit is being held. In Illinois, landlords with 25+ units must provide a receipt that includes the name and address of the financial institution where the deposit is held.

Illinois law requires landlords to provide reasonable notice before entering a tenant's unit (typically 24-48 hours, depending on local ordinances). Create a form to document when and why you need to enter the property, which you can provide to tenants in advance of entry.

While Illinois has a statewide ban on rent control, some municipalities may have specific regulations affecting rental increases or other aspects of property management. Research any local ordinances that might impact your ability to set or raise rents.

Establish a system to track rental income and expenses for tax purposes. Rental property income must be reported on your federal and Illinois state tax returns. Many expenses related to rental properties are tax-deductible, so proper documentation is essential.

Secure appropriate landlord insurance coverage, which differs from standard homeowner's insurance. This should include property damage, liability coverage, and potentially loss of rental income coverage. Consider requiring tenants to obtain renter's insurance as part of your lease agreement.

Establish a clear procedure for tenants to report maintenance issues and for you to respond to them. Illinois law requires landlords to maintain properties in compliance with building and housing codes. Failure to address maintenance issues can result in tenants having the right to withhold rent or make repairs and deduct costs.