Free Illinois Security Deposit Interest Notice
Illinois security deposit interest notice under 765 ILCS 715/. Required for buildings with 25+ units on deposits held over 6 months. Chicago RLTO §5-12-080 applies separately to most Chicago rentals.
Free Illinois Security Deposit Interest Notice — overview
An Illinois Security Deposit Interest Notice is the annual interest disclosure required under the Illinois Security Deposit Interest Act (765 ILCS 715/) for landlords of buildings with 25 or more rental units. Chicago landlords are subject to additional requirements under Chicago RLTO §5-12-080.
Complete the Security Deposit Interest Notice
Complete the form below to generate an Illinois Security Deposit Interest Notice. Required for buildings with 25 or more units holding security deposits more than 6 months. The rate is not published by an agency: 765 ILCS 715/1 fixes it as the rate paid on minimum-deposit passbook savings accounts by the largest commercial bank, measured by total assets, with its main banking premises in Illinois, as of December 31 of the year before the tenancy began. Chicago RLTO applies separately – use the Chicago-specific notice if applicable.
⚠ Security deposit handling is one of the most-litigated areas of landlord-tenant law
Courts strictly enforce statutory itemization, timing, and notice requirements. Illinois 765 ILCS 715/2 makes a lessor who WILFULLY fails or refuses to pay the interest liable, on a circuit court finding of wilfulness, for an amount equal to the amount of the security deposit, together with court costs and reasonable attorney’s fees. Document every charge with photos, receipts, and inspection records. Consult an Illinois attorney for high-value disputes.
1. Parties
2. Rental Property & Lease
3. Security Deposit Held
4. Interest Rate & Disclosure
Illinois Security Deposit Interest Act (765 ILCS 715/) requires landlords of buildings with 25+ units to pay interest annually on security deposits held more than 6 months. The interest rate is set by the statute itself: 765 ILCS 715/1 pegs it to the rate paid on minimum-deposit passbook savings accounts by the largest commercial bank, measured by total assets, with its main banking premises in Illinois, as of December 31 of the calendar year immediately preceding the inception of the rental agreement. Chicago RLTO applies to most Chicago rentals regardless of building size and has separate requirements.
5. Landlord / Agent Signature
About the Illinois Security Deposit Interest Notice
The Illinois Security Deposit Interest Act (765 ILCS 715/) requires landlords of buildings with 25 or more rental units to pay annual interest on security deposits held more than 6 months. The interest rate is not set by an agency at all. Under 765 ILCS 715/1 it equals the rate paid on minimum-deposit passbook savings accounts by the largest commercial bank, measured by total assets, with its main banking premises in Illinois, as of December 31 of the calendar year immediately preceding the inception of the rental agreement. Interest that has accumulated to five dollars or more must be paid within 30 days after the end of each 12-month rental period, in cash or as a credit against rent due, except while the tenant is in default; all accumulated unpaid interest is payable on termination of the tenancy regardless of amount. Chicago landlords are also subject to the more stringent Chicago RLTO §5-12-080, which applies to most Chicago rentals regardless of building size. The statewide penalty under 765 ILCS 715/2 turns on a court finding, not on a tenant’s demand letter: a lessor who wilfully fails or refuses to pay the interest required by the Act is, upon a finding by a circuit court that the failure or refusal was wilful, liable for an amount equal to the amount of the security deposit, together with court costs and reasonable attorney’s fees. The twice-the-deposit remedy belongs to the separate Security Deposit Return Act at 765 ILCS 710/1.
Illinois Security Deposit Framework
- Statewide: 765 ILCS 715/ (Illinois Security Deposit Interest Act)
- Coverage: buildings with 25 or more rental units
- Deposits held: more than 6 months
- Interest rate: fixed by 765 ILCS 715/1 – the largest Illinois commercial bank’s minimum-deposit passbook savings rate as of December 31 before the tenancy began
- Chicago: RLTO §5-12-080 applies separately (more stringent)
- Penalty: on a court finding of wilful failure or refusal, an amount equal to the security deposit, plus court costs and reasonable attorney’s fees (765 ILCS 715/2)
Penalties for Improper Handling
Illinois has two layers of security deposit interest requirements. Statewide (765 ILCS 715/), the requirement applies to buildings with 25 or more units holding deposits more than 6 months – and the penalty, on a circuit court finding that the lessor wilfully failed or refused to pay, is an amount equal to the security deposit plus court costs and reasonable attorney’s fees. Chicago RLTO §5-12-080 is stricter, applying to most Chicago rentals regardless of building size and imposing 2x deposit + attorney fees + costs for various technical violations. Best practice: verify whether your building falls under statewide and/or Chicago requirements, calculate interest correctly using the rate 765 ILCS 715/1 fixes – the largest Illinois commercial bank’s minimum-deposit passbook savings rate as of December 31 before the tenancy began – and pay annually within 30 days of each 12-month rental period anniversary. Keep records of payment.
Best Practices
- Document with photos. Move-in and move-out photos are powerful evidence in any deposit dispute.
- Keep receipts. Charges must be supported by actual costs – retain invoices, contractor estimates, and receipts.
- Distinguish wear-and-tear from damage. Normal wear-and-tear is NOT chargeable in any state. Faded paint, minor carpet wear, and small nail holes are typically not chargeable.
- Time everything precisely. Most states have strict statutory deadlines from move-out for itemization and return. Missing the deadline can forfeit ALL deduction rights.
- Send by trackable method. Certified mail with return receipt is the gold standard – establishes both delivery and receipt date.
Related Resources
- Illinois security deposit laws
- Illinois habitability laws
- Illinois landlord tenant laws
- Illinois eviction notice laws
- Illinois late fee laws
- Security deposit laws by state
Frequently Asked Questions
Which Illinois landlords actually owe security deposit interest?
Only larger ones. Under 765 ILCS 715/1 the duty falls on a lessor of residential real property containing 25 or more units in either a single building or a complex of buildings located on contiguous parcels of real property. Read both halves. Twelve units in one building plus fifteen in the building next door on a contiguous parcel is a complex of 25 or more units and is covered, even though no single building reaches the number. The interest obligation then attaches to any deposit the lessor holds for more than 6 months.
Does the 25-unit threshold also apply to returning the deposit?
No, and this is the split landlords get wrong most often. The Security Deposit Return Act, 765 ILCS 710, carries no unit threshold at all. Its operative text at 765 ILCS 710/1 reaches “a lessor of residential real property who has received a security deposit,” full stop; that current wording comes from Public Act 103-224, effective January 1, 2024. The 30-day itemization deadline, the 45-day full-return deadline and the twice-the-deposit exposure therefore bind Illinois residential landlords of any size. Only the interest duty in 765 ILCS 715 turns on 25 or more units.
What interest rate applies, and who sets it?
No agency sets it. 765 ILCS 715/1 fixes the rate by reference: it equals the interest paid on minimum deposit passbook savings accounts by the largest commercial bank, as measured by total assets, having its main banking premises in Illinois, as of December 31 of the calendar year immediately preceding the inception of the rental agreement. Two consequences follow. The relevant year is the one before the tenancy began, not the current year. And two tenants in the same building who signed in different years can be owed different rates, so calculate per tenancy rather than per property.
When does the interest have to be paid?
765 ILCS 715/2 sets two moments. Within 30 days after the end of each 12-month rental period, the lessor must pay the lessee any interest that has accumulated to an amount of 5 dollars or more, by cash or by credit applied to rent due, except when the lessee is in default under the lease. Separately, on termination of the tenancy the lessor must pay all accumulated interest that remains unpaid, regardless of amount. So a small balance you were entitled to hold each year still comes due in full when the tenant moves out.
What is the penalty for failing to pay the interest?
Under 765 ILCS 715/2, a lessor who willfully fails or refuses to pay the interest required by the Act is, upon a finding by a circuit court that the failure or refusal was willful, liable for an amount equal to the amount of the security deposit, together with court costs and reasonable attorneys fees. Note the limits of that sentence. The trigger is a judicial finding of willfulness, not a tenant’s written demand letter. And the measure is one times the deposit plus costs and fees. The twice-the-deposit remedy lives in the separate return statute at 765 ILCS 710/1.
Does Illinois law require a written interest notice like this form?
Not by statute. 765 ILCS 715 requires you to pay the interest and sets the timing; it does not prescribe a notice, a receipt or any particular paperwork. Using a written notice is good practice rather than a statutory command, and the reason is evidentiary: the Act’s penalty turns on a court finding of willful failure, so a dated record showing the rate used, the period covered, the amount and the method of payment is the cheapest defense available. Chicago is different, and its ordinance does impose its own deposit paperwork on covered units.
Does the interest Act apply to public housing?
No. 765 ILCS 715/3 states plainly that the Act does not apply to any deposit made with respect to public housing. That exclusion is written into the interest Act only. Do not read it across to the Security Deposit Return Act, 765 ILCS 710, which contains no equivalent carve-out in its text; that Act’s sections are 0.01, 1, 1.1, 1.2 and 2, and none of them excludes public housing. If you manage a mixed portfolio, decide coverage Act by Act rather than treating “security deposit law” as a single rule set.
How do Chicago rules differ from the state interest rule?
Chicago is a separate regime, not a stricter version of the same one. The Chicago Residential Landlord and Tenant Ordinance, Chicago Municipal Code chapter 5-12, imposes deposit duties that Illinois statute does not, including its own interest rate mechanism and account requirements for covered units, and it does not use the 25-unit line drawn by 765 ILCS 715/1. Suburban Cook County has its own ordinance as well. Never state a Chicago rule as Illinois law or the reverse. If the unit is in Chicago, work from the ordinance and use our Chicago interest notice instead.
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⚖ Legal Disclaimer
This form is provided for general informational purposes only and does not constitute legal advice. Security deposit handling is procedurally strict; improper itemization, timing, or notice can result in statutory penalties (often double or triple the deposit amount plus attorney fees). For Illinois guidance, visit IL Department of Financial and Professional Regulation and review 765 ILCS 715/. Chicago landlords: review the Chicago RLTO. Consult a qualified Illinois attorney for high-value disputes.
