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Illinois: Chicago Passes Ordinance Establishing Rights for Tenants in Foreclosure Properties and Creating Registration Requirements for Foreclosure Properties Occupied by Tenants

Posted By USFN, Thursday, August 1, 2013
Updated: Monday, November 30, 2015

August 1, 2013

 

by Jill D. Rein
Pierce & Associates, P.C. – USFN Member (Illinois)

The City Council of Chicago passed the Keep Chicago Renting Ordinance on June 5, 2013; it was published on June 26, 2013 and becomes effective 90 days thereafter (September 24, 2013). This ordinance is officially called the Protecting Tenants in Foreclosed Rental Property Ordinance (Chapter 5-14) and provides as follows:


Tenant Relocation Assistance (5-14-050)
The owner (the purchaser of a foreclosed rental property after the sale has been confirmed by the court and any special right to redeem has expired, or a mortgagee who has accepted a deed-in-lieu of foreclosure or consent foreclosure on a foreclosed rental property) of a foreclosed rental property (defined below) shall pay a one-time relocation assistance fee of $10,600 (per unit, not per occupant) to a qualified tenant (see definition below) unless the owner offers such tenant the option to renew or extend the tenant’s current rental agreement with an annual rental rate that: (1) for the first twelve months of the renewed or extended lease, does not exceed 102 percent of the qualified tenant’s current annual rental rate; and (2) for any twelve-month period thereafter, does not exceed 102 percent of the immediate prior year’s annual rental rate.

This provision does not apply to an owner who became an owner prior to the effective date of this act, a bona fide third-party purchaser, or an owner who will occupy the rental unit as the person’s principal residence.

“Foreclosed rental property” means: (1) a building containing one or more dwelling units that are used as rental units, including a single-family house; or a dwelling unit that is subject to either the Condominium Property Act or the Common Interest Community Association Act that is used as a rental unit; (2) for which legal and equitable interests in the building or dwelling unit were terminated by a foreclosure action pursuant to the Illinois Mortgage Foreclosure Law; and (3) one or more of the units are occupied on the date a person becomes the owner.

“Qualified Tenant” means a person who: (1) is a tenant in a foreclosed rental property on the day that a person becomes the owner of that property; and (2) has a bona fide rental agreement to occupy the rental unit as the tenant’s principal residence. For the purpose of the definition, a lease shall be considered bona fide only if:

  • The mortgagor or the child, spouse, or parent of the mortgagor is not the tenant;
  • The lease was a result of an arms-length transaction;
  • The lease requires the receipt of rent that is not substantially less than fair market rent for the property, or the rental unit’s rent is reduced or subsidized due to the government subsidy.

Any relocation fee must be paid no later than 7 days after the day of complete vacation of the rental unit by the qualified tenant by certified or cashier’s check. The owner may deduct from the relocation fee all rent due and payable for the rental unit occupied by the qualified tenant prior to the date on which the rental unit is vacated, unless such rent has been validly withheld or deducted pursuant to state, federal, or local law.

An owner is not liable to pay the relocation fee to any qualified tenant who: (1) does not enter into a rental agreement after being offered a renewal or extension of the tenant’s rental agreement with a rent in an amount that complies with this ordinance; or (2) against whom the owner has obtained a judgment for possession of the rental unit.

If an owner fails to comply with this section the qualified tenant shall be awarded damages in an amount equal to two times the relocation assistance fee and other damages to which they may be entitled.

The owner shall comply with this section of the ordinance until the property is sold or transferred to a bona fide third-party purchaser.

If a qualified tenant is evicted for cause the owner is not liable for any relocation assistance provided under this section.

Written Notice to Tenants (5-14-040)
No later than 21 days after a person becomes the owner (the date of sale confirmation or execution of a deed-in-lieu or entry of consent judgment of foreclosure) of a foreclosed rental property, the owner shall make a good faith effort to ascertain the identities and addresses of all tenants of the rental units in the foreclosed rental property and notify, in writing, all known tenants of such rental units that, under certain circumstances, the tenant may be eligible for relocation assistance. The notice shall be given in English, Spanish, Polish, and Chinese and be as follows:


“THIS IS NOT A NOTICE TO VACATE THE PREMISES. You may wish to contact a lawyer or your local legal aid or housing counseling agency to discuss any right that you may have.

Pursuant to the City of Chicago’s Protecting Tenants in Foreclosed Rental Property Ordinance, if you are a qualified tenant you may be eligible for relocation assistance in the amount of $10,600 unless the owner offers you the option to renew or extend your current written or oral rental agreement with an annual rent that: (1) for the first twelve months, does not exceed 102% of the immediate prior year’s annual rental rate; and (2) for any twelve-month period thereafter, does not exceed 102% of the immediate prior twelve-month period’s annual rent. The option to renew or extend your lease shall continue until the property is sold to a bona fide third-party purchaser.

If you are eligible as a qualified tenant and the owner fails to pay you the relocation assistance that is due, you may bring a private cause of action in a court of competent jurisdiction seeking compliance with the Protecting Tenants in Foreclosure Rental Property Ordinance, Chapter 5-14 of the Municipal Code of Chicago, and the prevailing plaintiff shall be entitled to recover, in addition to any other remedy available, his damages and reasonable attorneys’ fees.”


The notice shall also include the name, address, and telephone number of the owner, property manager, or owner’s agent who is responsible for the foreclosed rental property.

If the owner ascertains the identity of a tenant more than 21 days after becoming the owner, the owner shall provide the notice within seven days of ascertaining the identity of the tenant.

The notice must be served by:

  • Delivering a copy of the notice to the known tenant;
  • Leaving a copy of the notice with some person of the age of 13 years or older who is residing in the tenant’s rental unit; or
  • Sending a copy of the notice by first-class or certified mail, return receipt requested, to each known tenant, addressed to the tenant.

The notice must also be posted on the primary entrance of each foreclosed rental property no later than 21 days after a person becomes the owner (the date of sale confirmation or execution of a deed-in-lieu or entry of consent judgment of foreclosure).

An owner may not collect rent from any tenant until the written notice is served and posted.

Registration of Foreclosed Rental Property (5-14-060)
No later than 10 days after becoming the owner of a foreclosed rental property, the owner shall register such property with the commissioner.

The registration shall be in a form and manner prescribed by the commissioner and shall contain the following information:

  • Name, address and telephone number of owner;
  • Address of foreclosed rental property;
  • If more than one unit is located in the property, the number of rental units in the property and whether each rental unit was occupied by a known tenant at the time the person became the owner. If occupied, the name and address of each known tenant;
  • If the foreclosed rental property consists of only one rental unit, the name of the known tenant at the time the person became the owner;
  • Name, address, and telephone number of the owner’s agent for the purpose of managing, controlling, or collecting rents and any other person not an owner who is controlling such property, if any;
  • Name, address, and telephone number of a natural person 21 years of age or older, designated by the owner as the authorized agent for receiving notices of code violations and for receiving process, in any court proceeding or administrative enforcement proceeding, on behalf of such owner in connection with the enforcement of this Code. This person must maintain an office or actually reside, in Cook County, Illinois. An owner who is a natural person and who meets the requirements of this subsection as to location of residence or office may designate himself as agent;
  • An affidavit signed by the owner which lists, by rental unit, all the qualified tenants at the time the person became the owner; and
  • Any other pertinent information reasonably required by the commissioner.

Any owner who fails to register under this section shall be deemed to consent to receive, by posting at the foreclosed rental property, any and all notices of code violations and all process in an administrative proceeding brought to enforce code provisions concerning the property.

The owner shall pay a $250 fee at the time of registration.

If any of the pertinent information changes, the owner shall file a statement indicating the nature and effective date of the change within 10 days after the change takes effect. If the property is sold to a bona fide third-party purchaser the owner shall, within 10 days of such sale or transfer, notify the commissioner in writing in a form and manner prescribed by the commissioner. If the property becomes vacant after registration pursuant to this section, the owner shall comply with the vacant building registration requirement of chapter 13-12, if applicable.

Remedies (5-14-070)

A tenant may bring a private cause of action seeking compliance with section 040 and 050 and the prevailing plaintiff shall be entitled to recover, in addition to any other remedy available, his damages and reasonable attorneys’ fees.

Waiver of Rights Not Allowed (5-14-080)

No rental agreement offered or entered into by an owner after the effective date of this chapter may provide that a tenant agrees to waive or forego the rights and remedies provided under this chapter and any such provision in a rental agreement is unenforceable.

Violation-Penalties-Liability (5-14-100)

Any person found guilty of violating this Chapter, or any rule or regulation promulgated hereunder, shall be fined not less than $500 or more than $1,000. Each failure to comply with respect to each person shall be considered a separate offense and each day that a violation exists shall constitute a separate and distinct offense.

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