Real Estate Law: Commercial
Real estate law covers the rights to possess, use, improve, rent, encumber, and sell real property. It is not concerned with the rights to personal property, such as a car, although it does cover what is attached to real estate, such as a house.
In this section we'll discuss commercial real estate, focusing in particular on the landlord-tenant relationship. For information on residential real estate, see Real Estate Law: Residential. For information on financing a real estate transaction, see Real Estate Finance Law. For information on real estate taxes, see Real Estate Tax Law.
Leases. A lease is a written contract between the owner of property, the landlord, and the renter of the property, the tenant. Unlike contracts for the sale of real estate, leases do not have to be in writing; they can be oral.
A lease from period to period without any end date that renews automatically is a periodic lease. Thus, a month-to-month lease that renews automatically is a periodic lease. A lease for a set time is called a term lease. Thus, a one-year lease is a term lease.
If the periodic lease doesn't say when notice must be given to terminate the lease, Illinois steps in and provides that a week-to-week lease requires one-week advance notice, anything between a week-to-week and a year-to-year lease requires 30 days' notice, and a year-to-year or longer requires 60 days notice.
Security deposits. Landlords usually require a renter to provide a security deposit to cover damages when the renter moves out. Illinois law does not limit how much a landlord can charge, and it does not prohibit the landlord from increasing the amount, subject to certain restrictions.
The landlord is required to return the deposit within 45 days of the end of the lease. If the landlord intends to keep any of the deposit, the landlord must provide an itemized statement of the damages within 30 days of the end of the lease. The landlord is also allowed to keep some of the deposit if the tenant failed to provide adequate notice of termination. The landlord must pay five percent interest on the security deposit, if the landlord rents to 25 or more renters.
Repairs. Generally, repairs are the landlord's responsibility. Under Illinois law, the landlord has a reasonable time after being notified by the tenant to make the repairs.
If the landlord fails to make the repairs with a reasonable time, the tenant has three options. First, the tenant could report the problem to the appropriate local authority charged with inspecting buildings. Landlords are prohibited by Illinois law from retaliating against tenants who report problems to the authorities.
The second option is to withhold rent, although this option should not be undertaken lightly. The tenant should take less drastic steps first, such as making requests of the landlord and notifying the authorities. The tenant also must notify the landlord in writing of the intent to withhold rent before doing so.
The third option is file criminal charges or a civil lawsuit against the landlord. The criminal charge is, of course, the more drastic of the two steps and should not be undertaken unless the unit has become uninhabitable and the renter's health is in danger. A civil suit may be appropriate where the tenant has had to spend money to fix a problem the landlord should have fixed. The suit will not succeed, however, unless the other remedies for getting the unit fixed have failed.
Additional protections. Landlords are prohibited from locking tenants out of their unit, unless a court order permits. Landlords may not enter the unit without the tenant's permission, except in limited cases, such as to show the unit to prospective renters after the current renter has given a notice of termination. Tenants have, of course, any rights granted to them in the lease. In addition, under Illinois law, they may sublease the unit, unless the lease forbids it, they have the right to use their unit in any legal way, and they have the right to quiet enjoyment in the unit, which means that the landlord's use of the property is restricted to the extent it interferes with the tenant's quiet enjoyment.
Eviction. A landlord who wants to evict a tenant must sue the tenant in Illinois state court. Landlords do not have the right to throw tenants out on their own. Illinois laws require the landlord to follow a particular course of action prior to filing suit. The steps include giving the tenant proper notice of the eviction and giving the tenant an opportunity to correct violations of the lease. A landlord who wants to evict a tenant should consult an attorney with experience in evictions because the laws are designed to protect tenants from wrongful evictions. If the landlord wins the suit against the tenant, the sheriff can be used to evict the tenant.
Other remedies. Where a landlord pays the bill for utilities, the landlord cannot have any of the utilities shut off to punish the tenant or to induce the tenant to pay back rent. The landlord can shut off a utility in order to make repairs. Illinois law also imposes rules on utility companies that are asked to shut off services. For example, they are required to provide 10 days' notice. In addition, Illinois law restricts the utility's ability to shut off service during the cold months, even for nonpayment of the utility bill.
Discrimination. The anti-discrimination statutes discussed in Civil Rights also apply generally to housing. In addition to the prohibitions against discriminating against anyone on the basis of race, religion, color, creed, age, etc., the laws prohibit landlords from discriminating against families with children under 18. In Chicago, a city ordinance forbids landlords from discriminating against gays.